Lord Ahmad of Wimbledon
Main Page: Lord Ahmad of Wimbledon (Conservative - Life peer)Growth and Infrastructure Bill
Lord Ahmad of Wimbledon Excerpts
Lord Ahmad of Wimbledon
My Lords, I am grateful to the noble Lord for tabling Amendment 46C and for presenting the case for it and Amendment 46D. In responding to these amendments, I will try not to repeat in detail the arguments that I made against them in Committee but I think it would be helpful if I said a few words about each of them in turn.
The new clause proposed by Amendment 46C sets out a proposal for hearings during the pre-application phase of the infrastructure planning process. As I hope I made clear in Committee, the Planning Inspectorate already offers a pre-application service to developers which can include regular meetings with developers and other interested bodies to discuss the project. I therefore regret that the Government are not convinced by the arguments that formal hearings, even where paid for by developers, are also needed.
I turn now to the question of waivers, as proposed in Amendment 46D. I have noted that the amendment has been somewhat constrained since Committee and now applies specifically to documents that are required to be submitted with an application for development consent. The Government have previously responded to this and, while recognising that this is more focused, we again remain unconvinced that a formal process is needed to achieve what the noble Lord is intending and seeking on behalf of infrastructure developers. Furthermore, the process could potentially undermine the certainty and transparency of the regime. Following changes made to the Planning Act 2008 by the Localism Act 2011, the Secretary of State already has discretion to accept an application that does not fully comply with many of the detailed documentation requirements under the Planning Act, provided that the application is,
“of a standard that the Secretary of State considers satisfactory”.
Based on that explanation, I hope the noble Lord will be minded to withdraw the amendment.
Lord Berkeley
I am grateful to the Minister for that response. I am disappointed in what he said but I shall study his response carefully. In the mean time, I beg leave to withdraw the amendment.
Lord Faulkner of Worcester
My Lords, I beg to move Amendment 48ZA and will introduce it very briefly. Your Lordships may recall that in Committee I moved that Clauses 22 and 23 should not stand part of the Bill. I defended the principle of SPP at some length, which is one of the reasons why I did not speak or respond to the noble Lord, Lord Hodgson, on the previous amendment. Having served on the Rookery South inquiry, I think that the SPP procedure is important and, for democratic reasons, deserves to exist. I regret that the Government have taken a decision which means that in many respects the SPP will disappear.
Clause 22, in particular, threatens open space. When open space is threatened with a development consent order and compulsory purchase, and where there is no suitable exchange land or the exchange land is deemed to be too expensive, the Secretary of State for Communities and Local Government may himself decide that the DCO need not be subject to special parliamentary procedure. He would also need to be satisfied that it is strongly in the public interest for the development to begin sooner than is likely to be possible if the order is subject to an SPP. I know that Ministers complained at earlier stages of the Bill that the Rookery South SPP took too long. I do not agree. I think that the SPP inquiry which we conducted was thorough and that it was important that it was carried out.
I am not tonight moving that Clause 22 be removed from the Bill. I am effectively inserting a sunset clause so that it would be possible for the Government to demonstrate that it was necessary for the special powers to be withdrawn for up to five years, and it would be necessary at the end of the process for them to win that argument again. I understand that there are pieces of open space that the Government may wish to see acquired compulsorily as part of an urgent planning matter. That is why I am not opposing the existence of Clause 22. However, the safeguard which the insertion of this sunset clause would ensure is worth considering. I beg to move.
Lord Ahmad of Wimbledon
My Lords, I am grateful to the noble Lord, Lord Faulkner, for setting out the reasoning behind his amendment. As he indicated, this would place a sunset clause on some of the provisions in Clause 22 five years after commencement. The Government are, of course, not opposed to such sunsetting clauses in legislation where they are appropriate. In fact, new domestic legislation that imposes a regulatory burden on business is now required to include such a clause. This ensures that the regulation is removed when it is no longer needed, where it is ineffective or where it imposes disproportionate burdens.
However, in the case of Clause 22, I have already made it clear that our aim is to reduce burdens on business by limiting the use of SPP. I remind your Lordships that, if enacted, Clause 22 will mean that SPP will apply in future only to cases involving National Trust land, commons and fuel and field garden allotments, as well as certain cases involving open spaces.
For open spaces, the new provisions being taken forward in Clause 22 will cater for those limited situations where suitable replacement land is not available, or is available only at a disproportionate cost, and where there is a strong public interest in the development proceeding more quickly than would be the case if SPP was required. It will also provide for situations where open space is required only for a temporary purpose.
We are legislating on this now because we consider that it could bring benefits to the development of major infrastructure. It surely makes no sense to assume that such benefits will not be as important in the future and that a burden that had been removed should automatically be put back in place five years from now, or from when this becomes law.
I made it clear in Committee that in most cases our expectation is that developers will continue to provide suitable replacement open space land where such land is acquired, thereby avoiding the need for SPP. At the same time, there may be a small number of occasions, as the noble Lord, Lord Faulkner, indicated, where such replacement land may not be available and development should be able to proceed promptly without going through SPP. This is just as likely to be the case in five or 10 years’ time.
The usual post-legislative review of the provisions within a Bill three to five years after Royal Assent, which will include a preliminary assessment of its effect, will provide the opportunity to review the impacts of Clause 22. I therefore hope that, with this assurance, the noble Lord will be minded to withdraw his amendment.
Lord Faulkner of Worcester
My Lords, I am grateful to the noble Lord, Lord Ahmad, for his response, which is slightly more encouraging than I thought it would be, not least because he referred to the need for a review after three years—I believe he said that. It indicates that there will be an opportunity for us to see what the effect of the limitation of the SPP in future is having, particularly on open space, which is the aspect that worries me the most.
To describe this as a burden is a little exaggerated, bearing in mind that SPP has been invoked on only three occasions since 1947, Rookery South being the most recent. However, having said that, I hope that the Government will take that review seriously, and so I will not press for a sunset clause after five years, and I beg leave to withdraw the amendment.
Lord Jenkin of Roding
My Lords, I beg to move the amendment standing in my name on the Marshalled List, and I will just interpose a word about the speech that we have just heard from the noble Lord, Lord Adonis—which was made, of course, by the former director of the Institute for Government. I understand what he said, because there is a great deal of dissatisfaction about the way that we make laws in this country, and there needs to be a very thorough examination of it. However, that is not what I am on about here.
I am grateful to my noble friend’s department, which suggested that I group these two amendments together, which I was very glad to do. Their common thread is of course that they have both been suggested to me by the City of London. The first, Amendment 48ZE, revisits a matter which I raised in Committee in relation to development in Greater London and concerns the relationship of the thresholds as to what would be regarded as nationally significant and what, for the purposes of Greater London, are to be regarded as regionally significant. It really is quite absurd that those two numbers should, in a sense, be almost the wrong way round, with a higher figure for London and a lower figure for the national significance. This applies in relation to the whole of Greater London but is of considerable practical significance to the City of London, because the higher threshold, which is provided by the Town And Country Planning (Mayor of London) Order 2008, for the mayor to intervene in the City is much higher than is required for the rest of London—40,000 square feet of floor space for London generally, but 100,000 square feet in the case of the City. I think that everybody can understand why that should be different and why the City should have a much higher figure, as it is an almost exclusively commercial area with a very small residential development. I went into some detail on that in Committee. I think it will be fairly evident to everyone that the sheer volume of the commercial development in London is quite exceptional and will continue to be so in coming years.
The amendment that I am putting forward reflects the idea that, whereas in Greater London as a whole thresholds are already laid down to identify those cases where commercial development might require a wider look than is taken by the local authority alone, these thresholds should not be undermined by the new procedure for nationally significant development. I suggest that it would make little sense—this is the point I made in Committee—to treat a development as nationally significant when it is too small to be treated as strategically important at the regional level.
When my noble friend answered the debate in Committee he made the point that the threshold is only intended as a minimum. I understand that: not every development above the threshold would necessarily be accepted as being nationally significant. The same of course is also true of the threshold laid down for the Mayor of London’s power of intervention—it is only a minimum level, above which the mayor may or may not decide that the application has potentially significant importance. In both cases, the purpose of setting a threshold appears to be the same: to make clear to the developers and local planning authorities alike that applications for planning permission will be dealt with in the ordinary way by the local planning authority in all but a few exceptional cases. To invoke parallel procedures in respect of tasks that are within the local planning authority’s normal sphere of experience and expertise would risk introducing unhelpful uncertainty into the system. That is the basis on which this amendment is being moved.
It seems difficult to justify a significant discrepancy between the two thresholds as is set to occur in the City of London. When my noble friend answered the debate, he agreed that it was hard to envisage. He said—I quote from Hansard—that,
“it is hard to envisage a type of nationally significant scheme that the mayor did not have the ability to consider as being of strategic importance”.—[Official Report, 4/2/13; col. 97.]
That really makes the case. That is exactly the principle that my amendment would seek to establish. I therefore suggest that it would be a simple and convenient way of ensuring consistency between the two regimes. Of course, I am quite ready to listen to what my noble friend on the Front Bench has to say. However, the important point is that it should be quite clear that the new regime should not interfere with the ordinary routine activities of local planning authorities, even in unusual areas such as the City. I hope that my noble friend will be able to see the sense of this, and if he cannot accept this amendment, perhaps he could bring back his own amendment at a later stage.
The other amendment is on quite a different subject that was also raised with me by the City. This is amendment 50A. It is intended to remove what is undoubtedly an uncertainty within the City of London about the setting up of business improvement districts. This depends upon the regulations, and the regulations need some clarification. Business improvement districts are usually described by the acronym BIDs and would normally be set up by companies, industrial companies, or the Government introduced a provision whereby they could be set up by local authorities. The detailed procedures for setting them up are contained in regulations made under the Local Government Act 2003.
Some noble Lords may recollect that I introduced an earlier Bill for the setting up of BIDs and took it all the way through this House, but it never made any progress at the other end of the corridor. However, I have a sort of paternal interest in BIDs. It is where bodies come together with a view to supplementing local services by having a ballot. If the ballot has a majority on getting business rate payers to pay a supplement on top, it serves to be able to finance those extra services. They have proved popular and they are widely used now all over the country. There has to be a majority of at least half of the total rateable value of the premises within the area. If that is met, then a BID can come into being and all businesses are obliged to make a contribution to the cost of the additional facilities.
The BIDs model is now an established mechanism for business engagement. However, the company is not the only way; as I said earlier, they can be introduced by a local authority. This is where the difficulty arises in relation to the City of London. It is maybe a more convenient model. The obvious case where a BID might be operated is in the City because the City of London Corporation already operates under a largely business franchise. The great problem arises over whether its regulations actually recognise this. One could have a sort of philosophical discussion as to whether an authority could give a direction to itself, which would be implied by the regulation if it is not amended in the way that I am suggesting. If there is a company set up for the purpose then it can ask the local authority to do certain things. However, if the local authority itself is going to do it, then the regulations ought to provide that that is possible, in a sense by giving directions to itself.
Given that the bid involves a payment of a levy by businesses as a result of a majority vote, and there will always be some businesses that may have voted against it, it is important to see that the procedure cannot be challenged in the courts. I understand that the City of London Corporation has already brought this difficulty to the attention of the department, and that the department acknowledged the difficulty. However, the Bill seems to provide an opportunity for clarification, which perhaps the Minister will be able to offer in his reply. Perhaps he could also indicate if there could be an amendment of the regulations fairly soon.
The City is anxious to get ahead with this and the regulations need to make it possible and ensure that it would be beyond challenge. I hope that my noble friend will be able to reply accordingly.
Lord Ahmad of Wimbledon
My Lords, I am grateful to my noble friend for tabling these amendments and giving me the opportunity to set out the Government’s position.
Turning first to Amendment 48ZE, I have noted my noble friend’s comments, both here and in Committee, and share his opinion on the unique role of the City of London. As I said in Committee, I know the City of London well. It is a world-leading financial and business centre, as we all know, and central to the health of our nation’s economy. It plays a key role in promoting growth and, as my noble friend has said, faces particular challenges in delivering new development in a complex, densely developed, urban and historic environment—challenges that it meets with admirable results, as I am sure all noble Lords would agree.
In bringing forward our proposals to enable business and commercial schemes to benefit from the nationally significant infrastructure regime, we have sought to strike a careful balance between the need to respect existing procedures within the planning system—where these work effectively—alongside developing a simple and consistent approach for dealing with development which is potentially nationally significant.
In seeking to strike that balance, we have considered the particular circumstances of London and, of course, the planning roles of the mayor, the City and other local planning authorities in London. That is why we have included a provision requiring the mayor’s consent before a direction is issued that a project in Greater London can be considered through the infrastructure planning regime. If the mayor does not think a project should be directed into the regime, the application will be dealt with under normal Town and Country Planning Act procedures.
I know that officials have met with the City of London and I have already alluded to local planning authorities in London, and the views of the Corporation of London are recognised within that. As representations are made, certainly with the Mayor of London as well, those representations would be given due consideration.
Among other respondents, the City of London has also raised detailed comments on the thresholds proposed in the consultation paper, as my noble friend mentioned. We are currently considering the responses that we have received, including those from the City of London. I reinforce the point that I set out in Committee, as my noble friend noted, that the thresholds set out in the consultation document were not intended by themselves to signify whether a project was, or was not, of national significance. The thresholds were intended to be a gateway to the Secretary of State’s direction process. On any request for a direction, the Secretary of State would have to consider the details and circumstances of the particular project. With this in mind, and in light of the existing requirement in the legislation for the Mayor of London’s consent to be obtained for London projects, we do not consider that at this stage it is desirable to add to the primary legislation as envisaged by this amendment.
A further qualification in the Bill would add unnecessary complexity, which runs counter to our objective of simplifying and streamlining procedure. We will also be prescribing the types of development in regulations, which will of course be subject to the affirmative procedure. Your Lordships will therefore have another opportunity to consider the types of development, in London and elsewhere, that might be directed into the infrastructure planning regime.
Turning now to my noble friend’s amendment on business improvement districts, it may help if I briefly say a few words about how business improvement districts operate. A business improvement district is a defined geographical area within which the businesses agree to pay a levy that is used to enhance the local trading environment. More than 100 such schemes have been introduced in England in the past decade and the Government consider business improvement districts to be an important tool in the current economic climate for promoting the localism agenda and local growth. The importance of business improvement districts was recognised in both the Portas review itself and the Government’s response to it.
“Delegation of planning functions by Mayor of London
(1) In section 38 of the Greater London Authority Act 1999 (delegation) after subsection (2A) insert—
“(2B) In relation to a function listed in subsection (2C), subsection (2) has effect—
(a) as if paragraph (b) referred only to members of staff appointed under section 67(1), and(b) with the omission of paragraphs (c) to (f).(2C) The functions referred to in subsection (2B) are—
(a) the function of giving a direction under section 2A(1) or (1B) of the Town and Country Planning Act 1990 (call-in of planning applications by the Mayor), and(b) the function of determining an application by virtue of section 2A or 2B of that Act.”(2) In consequence of subsection (1), omit section 2B(8) of the Town and Country Planning Act 1990 (which disapplies section 38(1) of the 1999 Act in relation to functions under sections 2A and 2B of the 1990 Act).”
Lord Ahmad of Wimbledon
My Lords, the existing legislation gives the Mayor of London specific powers in relation to planning in the capital, including the ability to call in applications for his own decision if they are of potential strategic importance for this city. In Committee, my noble friend Lord Tope made the case that the mayor should have the ability to delegate these decisions where he is unable to take them personally. This amendment responds to that suggestion. We agree that it is sensible for the mayor to have some ability to delegate these decisions. There may be times, for example, when he is out of the country or, very occasionally, a conflict of interest with his other mayoral responsibilities could arise. In these circumstances the ability to delegate will allow a quicker decision and minimise any delay to investment from the planning process. Equally, we recognise that these are important decisions for London, and so this amendment limits the office holders to whom the delegation may apply to those post-holders who are appointed by, and are directly accountable to, the mayor himself. In practice, this will allow decisions on whether to call in applications of potential strategic importance, or whether to grant permission for such schemes, to be made by the appropriate deputy mayor, should the Mayor of London be unable to make the decision himself.
This is a pragmatic amendment which responds to what was raised in Committee and which will assist with the efficient operation of the planning process in London. I hope that noble Lords will be able to support it. I beg to move.
Lord Smith of Leigh
My Lords, I do not know what it is about this clause but we always seem to reach it late at night—I am sure that we all wish we were somewhere else. I was the third musketeer who attended the meeting that the Minister kindly arranged and I echo noble Lords’ thanks to her for doing so, for the courtesy with which the meeting was held and for enabling us to talk to officials from the VOA. As the noble Earl said, we learnt a lot from that meeting, if not enough to change our minds.
I am sure the Minister thinks that we are the awkward squad, but we were trying to express our concern that the Government are pushing ahead with a policy on unfirm ground. What came through from the VOA officials was that the work that they had done to try to forecast valuations was pretty high level and they were not able to say what the precise impact would be. That was particularly the case with the “other” sector. They were unable to say precisely what might happen to the wide-ranging and different activities that are classified as “other”, so they chose—imprecisely, I thought—to push them all into being potential losers if revaluation takes place.
Included in the other categories is the category of pubs. I do not know what the situation is in areas where other noble Lords live, but if you took a drive in the area that I live in, you would see many pubs that have closed down or are offered for sale and so on. Because of the changing nature of drinking habits, pubs are not doing as well as they were. Clearly, if pubs were to be revalued at the moment, then surely they would actually gain from a revaluation, not lose.
The fundamental thing that I took away from the meeting was that the Government were really concerned with the concept of volatility and the belief that, if we do not change business rates valuation, as they should change in 2015, then people will continue to pay the same amount that they were paying and this will avoid volatility. However, if they do postpone the valuation, then in a sense we need to think that the volatility is bought at a particular cost. That cost, in a sense, is with the businesses which are least successful and which would have benefited from a revaluation; they are now subsidising those businesses which have been more successful. In other words, the retail sector of Wigan, which has not done very well, will be subsidising West End theatres. I do not think we can regard that as particularly fair.
I think that, as the noble Earl indicated and as I said in Committee, we need to recognise that the market does not simply stay still. If the Government want to change the cost of occupying premises, it is not simply to do with business rates; the rental value is reflected as well. Where business rates remain high, the pressure to reduce the rental value will be extreme. If we do come round to reinstating the revaluation in 2015, my view is that the volatility that the Government are so concerned about will be greater then because the pressures on the retail sector and other sectors will have had two more years to run, and therefore the changes will be even greater than they would have been if we had introduced the revaluation this year. Therefore, we will be buying stability for now but we will actually have greater volatility in the future.
It is a serious thing to change what has been a 20-odd-year process that all parties agreed was the way business valuations should be changed. It is a bit of a hobbyhorse of mine but, once we stop doing a routine revaluation, then we need a courageous Government to bring it back. Council tax valuations are still based on those set in 1991 because no Government have had the courage to revalue. We keep putting it off. It is not just this Government; the last Government kept putting it off. We are now in a nonsensical situation. I do not want us to be in that situation with business rates because clearly there is a great logic related to the rental values from business premises. We must not do that, so if we do delay it for two years, we should not delay it any more.
Lord Ahmad of Wimbledon
My Lords, I thank all noble Lords who have taken part in this debate. I state specifically that Amendment 49B would require the Secretary of State to publish updated estimates of the 2015 revaluation and to consult formally with those affected before this clause was brought into force. I say from the outset—and it has been raised—that the Government are totally committed to supporting business and delivering growth by providing a strong economic environment in which commerce and businesses can thrive. Businesses tell us that uncertainty is a major barrier to growth. Any business—small, medium-sized or large—will tell you that.
Clause 25 provides certainty over business rate bills for all businesses in England for the period up to 2017. The noble Lord, Lord Smith, talked about courage, and this policy is not being taken forward out of fear. It is being taken forward to address the issue of uncertainty. As business rates are linked to inflation, that means that there will be no real-terms increase in rates over this period. That is why we have decided to postpone the 2015 revaluation to 2017.
The importance of this certainty has been recognised by the Government in Scotland, who also announced their postponement before Christmas. Last week we heard that the Welsh Government will also postpone their revaluation to 2017. I welcome those decisions as they mean businesses operating across Great Britain can plan with confidence for the next four years. However, during the passage of this Bill we have heard too little from the opposition Benches about the benefits that this clause will give to business. Instead we have heard many criticisms of the Valuation Office Agency’s report on the high level impacts of a 2015 revaluation. In many cases, we have heard of criticisms from the private sector rating agents who advise ratepayers on appealing against the new assessments at a revaluation.
Following the Committee stage of the Bill, my noble friend Lady Hanham committed to, and we indeed arranged, a meeting with the noble Lord and the Valuation Office Agency to hear its concerns and to allow it to address and respond directly. That took place yesterday. I attended the meeting. I suppose I should be d’Artagnan of the Three Musketeers, but I am breaking ranks here because I am certainly from the other side. Never mind, one for all and all for one and we are certainly for business—and at the meeting certainly the VOA’s explanation of its work was one that I found helpful.
As we have said before, we understand that ratepayers would like to know what the postponement of the revaluation means for individual rates bills. But that is just not possible without spending, as has been indicated by my noble friend, in excess of £43 million on the revaluation itself. What we do know is that the VOA’s report is the only analysis we have seen that has been published in full and looks across all sectors and regions. We have seen studies from some firms which look only at specific prime retail locations and we have seen others which have merely sought to redraft the VOA’s analysis. None of those studies from private sector agents attempts to capture the full picture of the revaluation as has been done by the VOA. As such, the VOA’s report remains the only credible analysis of the impacts of a 2015 revaluation.
I will address a couple of the points that have been raised by noble Lords. The noble Lord, Lord McKenzie, referred to the 800,000 premises that would have seen a real-term increase in their rates compared to the 300,000 seeing a reduction. Some sectors, as has been acknowledged, would have paid big hikes including petrol stations at an increase of 28%; the self-catering industry such as caravan parks at 29%; hotels at 6%; theatres at 25%; and pubs at 11%.
The question was raised about the challenge of including the 530,000 in the 800,000. These 530,000 properties were in the “other” category. The VOA acknowledges, as it does throughout its report, that at this stage in the revaluation cycle it has very limited evidence on those properties. But the VOA, as it said in the meeting yesterday, has looked at some of the larger groups of property within this extra “other” category. Within that category we find petrol stations with an increase of 28% tax paid; hotels with an increase of 6% tax paid, and pubs with an increase of 11% tax paid. So the VOA remains comfortable with its professional judgment to support the figure of 800,000 losers.
The amendment also seeks to ensure that we consult with those affected before we postpone the revaluation. On this issue of consultation, of course we recognise the importance of speaking to ratepayers about the rating system. Both the Government and the Valuation Office Agency have regular fora to discuss business rates and indeed in recent weeks the Department for Communities and Local Government has held several meetings with those affected by the postponement of the 2015 revaluation. But, as I have said before, our priority is to give businesses extra certainty now, before the revaluation process starts to raise doubts about future rates bills. As the revaluation is a statutory exercise we need to take primary legislation to stop it. That is why we have moved forward to include these measures in the Growth and Infrastructure Bill. By placing the date of the next evaluation on the face of the Bill, as well as the requirement for five-yearly revaluations thereafter, we have also shown our commitment to keeping rateable values up to date. As the noble Lord, Lord Smith, said, we have shown courage to ensure that businesses are clear and Governments are clear in setting these revaluations. We will of course continue to speak to representatives of ratepayers about the postponement of the rating system in general.
The hour is late and the noble Lord, Lord Smith, reminded us that we seem to reach this point on this issue at this time. In the light of the reassurances I have given I hope that noble Lords will understand why the Government cannot accept this amendment.