Lord McKenzie of Luton
Main Page: Lord McKenzie of Luton (Labour - Life peer)Growth and Infrastructure Bill
Lord McKenzie of Luton Excerpts
Lord Greaves
My Lords, I understand the reasons behind these amendments but I am a little concerned about them. As regards the second amendment, there are very good reasons why a highways authority should be able to say no to a development in some circumstances if it considers that it would be unsafe and that to allow it to go ahead might cost lives or cause people to be injured. There are very good reasons for that power.
Of course, you can speed up the whole planning process very easily by abolishing it and letting people do what they want. The reason why the planning process exists and there are lots of obstructions in it to people doing exactly what they want as quickly as they want is because it is in the interests of society in general that planning should take place and that development should be controlled and organised in a way which is best for society. Nevertheless, it is perfectly proper to argue generally where the balance lies as regards the making of plans and individual applications.
The Environment Agency does not have a power of veto in relation to drainage but a lot of planning authorities will think very carefully indeed before going against the advice of that agency on matters relating to drainage. They will spend a lot of time talking to it to try to find an acceptable way through—a compromise—in a particular case.
I think that a lot of unintended consequences could flow from the first amendment in this group and that it has to be thought about very carefully indeed.
Lord McKenzie of Luton
My Lords, we await the Minister’s response on these amendments. I am bound to say that I have some sympathy with the point made by the noble Lord, Lord Greaves, about the second of the amendments and the need to have specific powers in some circumstances: for example, in the case of a highways authority. Presumably, that authority cannot exercise those powers in an arbitrary way. I should have thought that it had to be subject to a test of reasonableness.
The only point I would make on Amendment 81CA is that it seems to be a clear recognition of the fact that delays on the part of a local planning authority are not always or only the fault just of the local planning authority; it relies on others to play their part. That is why we will come back to Clause 1, which we wish to delete from the Bill.
Baroness Hanham
My Lords, the proposed new clauses in Amendments 81CA and 81CB seek to improve the performance of statutory consultees in the planning system. I am very sympathetic to this objective but I am not sure that these proposed new clauses are the way to achieve it.
It is important to recognise that statutory consultees have an important role in the planning system. The key statutory agencies have valuable expertise on a range of specialist areas such as heritage, highways and nature conservation, and their input helps local authorities ensure that the impacts of new development are comprehensively understood in planning decisions.
Where statutory consultees are consulted on planning applications, they are required by law to reply to the local authority within 21 days. In doing so, they must provide a substantive response, enabling the local authority to proceed with the determination of the application in question. Any extension to the 21-day deadline would need to be agreed with the local authority. Therefore, boundaries are already in place.
Statutory consultees are required to report annually on their performance in meeting these targets. The five main statutory consultees achieve between 96% and 99%. Taking this into account, we do not think that a system of fines could significantly improve performance and would be difficult to devise. However, we are aware of the need to improve the way statutory consultees engage with both local authorities and developers to foster a more positive approach to facilitating development and delivering growth. I am bound to say that the reply within 21 days cannot be just a holding reply; it has to be a full response.
We have also taken action to ensure that statutory consultees are more accountable for the advice that they give and we have changed the award of costs circular so that if an inspector considers that a statutory consultee has acted unreasonably during the determination of a planning application the consultee can become liable for an award of costs. Although I support the intentions behind the amendment, I do not think it is necessary, considering the steps we are taking.
The second amendment would repeal the general power in primary legislation for the Secretary of State to give directions restricting the grant of planning permission by a local planning authority. The Planning Acts give the Secretary of State a wide range of default powers that can be used as a last resort in relation to both plan-making and decision-taking. The powers are there as a fall-back to protect the public interest. The powers set out in Section 74 of the Act are exercised through Article 25 of the Town and Country (Development Management Order) (England) 2010 and that provides that the Secretary of State may give directions restricting the grant of permission by a local authority either indefinitely or during such a period as may be specified.
Planning applications are called in only in exceptional circumstances and the ability to serve holding directions is essential to the smooth functioning of the call-in process. In the case of the power of direction exercised by the Highways Agency, this is exercised during the consultation period, where the agency considers that, were a local authority to approve a planning application, it could result in a dangerous increase in risk to users of motorways and strategic roads. I agree that the Highways Agency should be accountable for the way in which this power is used in order to ensure that it is used for the key purposes of facilitating growth, both in ensuring that proposed developments are not delayed without good reason and in ensuring that approved developments do not result in additional congestion on the strategic road network. If noble Lords agree, I will write with further details on the Department for Transport’s policy on the use of these directions and on any future plans it might have to review them.
I should like to reassure my noble friend and other noble Lords that we are also concerned that any direction is used in as open and transparent a way as possible. The Highways Agency is very keen to work with applicants in developing their schemes and welcomes pre-application discussions. It knows that early engagement with developers is vital to ensure that applications can progress without delay. The agency says that it responds to consultations within the prescribed limit in 99.9% of cases. In 2011-12, 9.4% of responses made by the agency were a holding direction. As already mentioned, the agency has published an improvement plan with actions to improve its performance, especially in reducing the time taken.
I have abbreviated slightly what I wanted to say and I hope that, having done so, my noble friend will feel able to withdraw his amendment.
Lord McKenzie of Luton
My Lords, I added my name to this amendment, which, as the noble Earl, Lord Lytton, says, mirrors that moved by my honourable friend Nick Raynsford in another place. Like the noble Earl, I am grateful to those who have briefed us on this matter, particularly Gerald Eve, who has given us some compelling data.
As the noble Earl has explained, the amendment would prevent the postponement of the business rate revaluation scheduled for 2015 until the Government have produced detailed, up-to-date estimates of those likely to pay more and those likely to pay less, depending on whether the revaluation is deferred for two years and, crucially, until there has been a proper consultation with those likely to be affected. Requiring proper analysis and consultation is hardly revolutionary. It is the very least that should be expected if such a significant step as postponing a revaluation is to be taken.
This is a hotchpotch of a Bill, but Clause 25 sits particularly oddly with the rest of its provisions. The lack of prior consultation points to a last-minute decision that by all accounts does not generate unanimity within the ranks of the coalition Government. Our suspicions about this are reinforced by the fact that no mention was made of a possible postponement when we were discussing the Local Government Finance Bill just a few months ago. This is strange, given that we spent some time discussing the VOA and its role in the business rate retention scheme, prompted, as I recall, by the noble Earl, Lord Lytton. Concerns were expressed about its capacity to cope, especially with the backlog of appeals from two prior revaluations, although they were brushed aside by the Minister.
Notwithstanding that, the impact assessment now states that postponement will,
“allow the Valuation Office Agency to focus more resources upon continuing to improve the valuation process and supporting local authorities with the rates retention system”.
In replying, perhaps the Minister will give us a clear update on the capacity of the VOA and the resources available to it, or we might be tempted to revert more directly to this matter when we reach Report.
We should be clear that the purpose of rating revaluations is to achieve fairness in the business rate system by ensuring that rateable values are based on up-to-date rental values. Given that aggregate business rates are kept whole in real terms, revaluation would redistribute resources to those areas and sectors that have fared relatively badly since the last revaluation from those that have fared relatively better. Clearly, the extent to which this fairness is maintained depends on how frequently rateable values are updated. Since 1990, this has been every five years, a period that is seen as the maximum interval between revaluations.
The noble Earl, Lord Lytton, referred to the Michael Lyons report, which suggested that more frequent revaluations are justified, particularly during the economic turbulence and downturn that we have experienced since 2008. If the Government are to change the frequency of revaluations, especially to lengthen it, there is surely an obligation on them to provide a robust rationale for the change from the practice that has been maintained since 1990 free of political interference. This, I suggest, has not been done.
The Government are overwhelmingly basing their case on the VOA estimates of winners and losers should the revaluation proceed—supposedly, 800,000 facing a real-terms tax increase and only some 300,000 facing a fall. However, as the VOA makes clear—and the noble Earl has touched on this point—these are “high level” estimates, not forecasts, they are based on limited rental data, and neither the rental data nor judgments have been subjected to moderation and validation. Moreover, even on the VOA data given, experts have questioned whether the data can be used to justify the figures used by the Government. This has been set out in the briefings we have received, which have specifically drawn attention to the 528,000 hereditaments classified as “other”—not retail, office or industrial—which have been assumed to be the subject of an increase in rates, where some would clearly fall into the category of those that will benefit from a reduction.
The Government’s analysis is at best crude. It does not seek to address the likely level of increases and decreases, and their distribution; nor is there any consideration of what the likely position might be two years hence. The overwhelming suspicion is that this is a political decision taken to avoid a revaluation operating in 2015, at the time of the general election. It is accepted that revaluations bring a degree of turbulence, but transitional relief has hitherto dampened the effects. If the Government are to refute this challenge, they can do what this amendment asks—produce a proper analysis and then consult with those affected.
One clear consequence of postponement will be that those areas and sectors which have done comparatively poorly since 2008 will be denied for an extra two years the reduction in tax they might have expected. Those that have performed comparatively well will have a postponement of the increase in tax. Of course, a reduction in rental values and rateable values will not necessarily generate a reduction in business rates because the tax rate—the multiplier—will rise to keep the aggregate business rates steady. However, if rental values have fallen across England by 14%, those areas and sectors which have done worse than this are the likely losers from the postponement. The issue cannot be seen just in terms of regions or cities, but information provided by the Investment Property Databank highlights that, between March 2008 and September 2012, rentals have fallen in Leeds by 31%, Nottingham by 27%, Bristol by 25%, Sheffield by 21%, Liverpool by 21%, Manchester by 19% and Newcastle by 18%. In terms of the sectors, although retail has held up in some areas, the situation in many high streets is grim. As the noble Earl, Lord Lytton, said, five out of six of the Portas pilot areas have seen rental falls greater than 14%, and news of major retail closures are all too familiar.
For those who are struggling and who had an expectation of some moderation in their business rates, the decision to postpone will prolong the agony. While “no change” may be good news for some, the undermining of a system for political ends is not conducive to building business confidence. This amendment asks for a proper analysis so the Government can justify the decision they are seeking to impose.
Lord Smith of Leigh
My Lords, I rise to speak to the question of whether the clause should stand part of the Bill and will try, at this time of night, to avoid repeating some of the comments made by the noble Earl, Lord Lytton, and my noble friend Lord McKenzie of Luton. The significance of this clause is that it breaks the consensual approach to business rating that has been in place since the Local Government Finance Act 1988. Here we are, on the eve of the revaluation which would have taken place later this year, being asked to delay it. The process of revaluation seems to have been clearly explained in The Council Tax and Non-Domestic Rating (Demand Notices) (England) (Amendment) Regulations, which the Government issued in 2012 and which say:
“All rateable values are reassessed every five years at a general revaluation. The current rating list is based on the 2010 revaluation. Five-yearly revaluations make sure each ratepayer pays their fair contribution and no more, by ensuring that the share of the national rates bill paid by any one ratepayer reflects changes over time in the value of their property relative to others”.
That seems a very clear statement of intent. Now the Government are delaying that process so, despite what they said only earlier last year about a commitment to fair share, that commitment has, presumably, been broken.
Noble Lords mentioned the Government’s case about volatility, but volatility has always occurred whenever we have had a rating revaluation and we can cope with that. The data we have from the Valuation Office Agency are pretty sketchy. I will not repeat the comment about the rather suspicious addition of the 500,000 others who make the balance of the case. Before that the balance was that there were more winners than losers. The various revaluations that we have seen—I got a briefing from Colliers International—show that in all parts of the country rateable values in the retail sector seem to have fallen by at least 19%. For the individual centres they looked at, well over 80% had shown considerable falls, with a third of them over 25%. By contrast, the West End had shown an increase of 26%. These figures come from what Colliers calls its midsummer review, which happened last year. If the Government go ahead with this delay, the retail sector might well refer to this as a midsummer murder.
Both the noble Earl and my noble friend mentioned the Lyons review, which is the most recent authoritative report on local government finance. To further my noble friend’s point, I quote directly from Lyons about more frequent revaluation:
“This would make the tax more responsive to the actual state of the property market and could have economic advantages by reducing the burden of taxation on businesses in economic downturns”.
Goodness me—we are in an economic downturn. Lyons has suggested what should happen, but the Government have taken the opposite conclusion to this evidence. We need to understand why this has happened.
Both noble Lords mentioned the Portas review so I will not go into that again. One briefing I read also said that a further unintended consequence of the review could be its impact on property prices over the next couple of years. In areas of decline, this will put further downward pressure on prices so that property values fall much further than they might have if the review had taken place. In areas where property prices have risen, the effect may be the opposite—property prices would rise to soak up the impact of the lack of change. By the time we get to the proposed revaluation two years hence, the amount of turbulence will be significantly higher than it would have been if we had gone ahead with it now. Therefore, it is going to take a Government some degree of courage in 2015 to go ahead with that review if we are going to implement it. As noble Lords have said, this is a really important step. The Government need to give us a lot more information, if they have it, about how they can justify doing this, or we will need to come back to this on Report.
Lord McKenzie of Luton
My Lords, would the noble Baroness perhaps explain to us what stability this decision gives to businesses which have really been struggling? For these businesses, rental values and rateable values are sure to decline in any revaluation that took place when it should. What stability is there for those businesses that were looking forward to some relief from a reduction in business rates? Is it not traditionally the case that there is a period of transitional relief for businesses that might suffer or be subject to an increase, in order to spread and dampen it?
Baroness Hanham
My Lords, we believe that stability will be provided by not having a revaluation at the present time. The economic situation is such to make a sureness and security about whatever position people are in very valuable. This is what is required at the moment to ensure that businesses know where they are. We appreciate that businesses are actually going through a very tough time; we have seen that on the high streets and we know that it is happening. So for businesses to have one problem fewer would be valuable.
Lord McKenzie of Luton
Given that what seems to be at the heart of this is a dispute over the interpretation of the VOA figures, would the Minister be prepared to set up a meeting which noble Lords could attend together with the VOA and those who have put to us a different analysis of the VOA’s data?
Baroness Hanham
My Lords, I am not sure that a combative meeting, which I think that that would be, would be very valuable. Perhaps I may think about that and see whether it would be helpful; I am not certain that it would be.
The measure is designed to give businesses security, to enable them to know where they are and to help them through what is a very difficult time.
I was asked also about the capacity of the Valuation Office Agency. We believe that it does not make any difference; it is up to it. It will have to do the same estimates again in a couple of years.
We have discussed the impact of appeals on several previous occasions. I have already told noble Lords that headroom is created in the local government financial settlement to ensure that rating appeals are taken into account and that local authorities do not lose out as a result. I hope that, with those explanations, noble Lords will decide not to press their amendments.