Growth and Infrastructure Bill

Lord McKenzie of Luton Excerpts

Tuesday 8th January 2013 Lords Chamber

[Lord McKenzie of Luton]

My Lords, this has been an extensive and excellent debate, but one which has exposed the gap between the reality of the measures in the Bill and the needs of our country for growth and infrastructure. The Bill lacks coherence, vision and a plan for growth. In the terms of my noble friend Lord Rooker, who put it bluntly, “It won’t work”. My noble friend Lord Smith said that it was a missed opportunity. My noble friend Lord Whitty said that it ignored the need for serious thinking on infrastructure investment. The noble Lord, Lord Greaves, called it, “ad hoc, hotchpotch”, with no structure. The noble Lord, Lord Taylor, said that it was cobbled together to fill the vacuum left by the lack of Lords reform. My noble friend Lady Turner said that there was no comfort in it for the construction industry. The noble Lord, Lord Shipley, at least clung to the view that the title could be seen as a statement of intent.

Much of the Bill is focused on reform of the planning system before the ink is dry on the Localism Act and the NPPF. We had a mini-debate on the NPPF, with a difference of views between the noble Lord, Lord Teverson, and my noble friend Lord Hanworth. That bodes well for Committee. The Bill is predicated on the notion that the planning system, rather than the lack of finance, is holding back growth, a theme that was challenged by a number of noble Lords. That assertion is based at best on anecdote and it lacks a systematic and rigorous basis of assessment that takes account of both cost and benefit. The noble Lord, Lord Tope, asked where the evidence is. Yet again we see the imprint of a Secretary of State who espouses the cause of localism but everywhere removes power from local authorities and takes them to himself.

We welcome some measures, especially those which flow from the Penfold review, and which we expect to be able to support. However, they do not amount to a comprehensive plan for growth, and they will not catapult us into the premier league of competitiveness. We have grave misgivings about Clause 1, which are shared by many noble Lords, including the noble Lord, Lord Tope, the noble Baroness, Lady Eaton, my noble friend Lord Whitty, and the noble Lords, Lord Teverson, Lord Best, Lord Taylor and Lord True. The clause gives unprecedented powers to the Secretary of State to strip any local authority of its planning powers if deemed to be failing so that a developer can seek approval for major applications from the Secretary of State. On the basis of the initial criteria, and taking account of planning performance agreements, vanishingly few local authorities may be deemed to be failing, bearing in mind that planning approval rates are at a 10-year high. However, the risk is a tightening of the threshold in subsequent years, although the Government refuse to set out their response to their consultation on this matter until the Bill becomes law. Why is this?

In all of this there is no recognition of the intense financial pressures which government cuts are imposing on local authority planning departments, as on other services; or that designation will weaken local authorities’ ability to improve as they lose fees and struggle to retain more able staff to deal with major applications; that the policy will tilt the balance struck in the NPPF and encourage local authorities to eschew quality and develop their engagement for speed; or that engagement with local communities will be impaired. Frankly, this clause should be deleted.

In Clauses 2 and 3 we see yet further examples of the Secretary of State taking powers to himself. In Committee we will seek to ensure that these are exercised in a transparent manner and in line with proper consultation.

Clause 4 touches on permitted development rights. Our major concern in this regard is not what is in the Bill concerning the extension of rights. Decisions to extend these centrally will lead to unintended consequences in different localities. If the Government really believed in localism they would agree that these matters should be determined locally.

We desperately need more affordable housing and we should acknowledge the important role that Section 106 agreements have played in delivering this ambition. As ever, the noble Lord, Lord Best, spoke with passion on this matter. We consider that Clause 6, which enables developers to seek renegotiation of the affordable housing obligations with a right of appeal to the Planning Inspectorate, is particularly egregious. In the words of my noble friend Lady Whitaker, it is a step back to another world. It is another example of overriding the judgment of local authorities, which already have the power, which they use, to renegotiate such agreements.

We will challenge the linking of project viability just to affordable housing and will argue that any test to be applied should not just be one of economic viability. The development plan policies and different housing needs of an area, including rural areas, must feature in the assessment. However, if this clause is to remain, then it should be considered as a short-term measure with a sunset clause to bring it to an end. My noble friend Lord Adonis has asked the Minister to tell us precisely which stalled sites she considers unviable due to Section 106 affordable housing obligations. I hope that she will do that.

While we support steps to increase access to broadband, including for national parks, this must be done in the right way and not with the sledgehammer approach referred to by the noble Baroness, Lady Parminter. As the Bill stands, there are concerns that Clause 8 would permit a free-for-all in areas of outstanding natural beauty, which is why we will continue to pursue mechanisms which will narrow the focus of this provision. We understand the point made by the noble Baroness, Lady Hanham, in her introduction about EU requirements and will look to see how that bears on secondary legislation. We were reminded by the noble Baroness, Lady Brinton, about the importance of broadband, particularly in respect of rural areas, and by the noble Baroness, Lady Valentine, more generally.

Clauses 13, 14 and 15 seek to make it more difficult for a green space to be designated as a town or village green. The intent is to stop vexatious applications to register land which are submitted to thwart proposed development. We would have common cause in not wanting to see the opportunities to designate green space used in this manner but remain unconvinced that it is a major problem. The CPRE cites there being only 185 applications for this status in 2009, which can be compared to many tens of thousands of planning applications.

However, we do not oppose all change to the existing arrangements but will look for assurances on publicity around landlord statements and will seek changes to the heavy-handed approach to removing the right for local inhabitants to apply for registration of land as a green space once it has been marked down for development. This approach goes beyond what Penfold proposed.

A number of provisions in the Bill are focused on clarifying and streamlining the process for infrastructure planning but also on restricting the special parliamentary procedure in part to overcome anomalies. The intervention of my noble friend Lord Faulkner in relation to Clauses 22 and 23 is highly relevant. These clearly are matters that we will have to review in depth in Committee.

My noble friend Lord Berkeley spoke about the need to extend some of the provisions relating to easing the infrastructure process. That also will be something which we will need to examine in Committee, as well as his point about the resources for the Planning Inspectorate, given the multiplicity of different roles provided for it in the Bill.

Clause 24 seeks to bring business and commercial applications into the major infrastructure regime, which was established in the Planning Act 2008. We are not opposed to a broadening of the regime, although the way in which the clause does this would represent a considerable departure from the current system. “Business” and “commercial” need to be adequately defined as they are not so obviously in the public interest or nationally significant. Widening the regime opens up yet further possibilities for bypassing local decision-making and the lack of any national policy statements bypassing parliamentary scrutiny. We will pursue amendments on these matters.

The inclusion of a clause to defer the 2015 rating list revaluation by two years comes as a surprise, particularly as we have only just completed our scrutiny of the Local Government Finance Act where we had extensive discussions about the role and resourcing of the VOA. The deferral breaks a tradition of more than 20 years of regularly uprating business rates that has not been subject to political interference. As my noble friend Lord Smith pointed out, the Government have justified this decision on the grounds of providing certainty for business at a difficult time and that there would be many more losers than gainers from the 2015 revaluation. It is accepted that a revaluation would not overall increase or decrease aggregate revenue from business rates but a revaluation is supposed to maintain fairness by ensuring that rateable values reflect up-to-date rental values.

As we have heard, the VOA undertook its high-level, indicative estimates based on limited rental data. Others have called into question the projections made from this analysis and the CBI has declared that it considers the benefits of deferral to be overstated. Before proceeding with a deferral, there should be a full consultation process and the Government should publish comprehensive estimates of how businesses are to be affected. We also would want to take the opportunity to assess the current fitness for purpose of the VOA, its resourcing and how it is handling appeals from previous valuations. The Minister will recall our deliberations on the business rate retention scheme and calls then for rating revaluations to coincide with a general resetting of the system. Will putting back the revaluation affect the current 2020 timetable?

Finally, the nonsense that is Clause 27 has been comprehensively taken apart by my noble friend Lord Adonis, and he was supported by many other noble Lords—my noble friends Lord Monks, Lord Morris, Lady Turner and Lady Donaghy, as well as by the noble Baroness, Lady Brinton, and the noble Lord, Lord Greaves. Seldom have we seen a government proposal that has such little support. The raft of amendments that the Government have already been forced to bring forward underlines the technical complexity of the scheme. If it is anything, it is a job creation programme for lawyers and accountants. In concept, perhaps the Government will explain why it is okay for senior executives to sit on their stock options yet still benefit from handsome payoffs when they leave, but it will be a spur to growth if employees are offered the arrangements to forgo their redundancy entitlement that are proposed in the clause.

The noble Baroness, Lady Wheatcroft, made reference to the range of existing employee shareholding schemes. If such arrangements are out there, why cannot they be used? What is so great about the proposals in the Bill? Concerns have been expressed about the scheme being used for tax avoidance. From debate in Committee in the Commons, it would seem that we will have to await the Budget to understand the extent to which the issue of shares, fully paid, will be free of income tax and capital gains on subsequent disposal. Can the Minister shed further light on this? What is the estimated cost in term of tax forgone as a result of these proposals?

There remains a raft of technical issues to pursue around valuation, TUPE, JSA claimants, compulsion, realisation, share rights and dilution—to name but a few. Our opposition to this clause is not principally about technicalities. Cutting the rights at work of employees is wrong in principle and, in the terms of my noble friend Lord Monks, unethical. It will not help jobs and growth, and that is why it has so little support among employers as well as employee groups. The proposition is divisive and the clause should be scrapped.

The Bill displays the worst features of a struggling Government. It is contradictory on localism, lacking in evidence base on planning, misguided in undermining employee rights, divisive in reducing affordable housing, and devoid of a strategic context. It will keep us busy in Committee.