Growth and Infrastructure Bill

Tuesday 16th April 2013 Commons Chamber

[Relevant document: the Seventh Report of Communities and Local Government Committee, The Committee’s response to Government’s consultation on permitted development rights for homeowners, HC 830.]

Consideration of Lords amendments

[Mr Speaker]

Before we commence our consideration, I should inform the House that the tag referring to the seventh report from the Communities and Local Government Committee was omitted, in error, from the Order Paper. Details are available from the Vote Office.

12:47

[The Minister of State, Department for Business, Innovation and Skills (Michael Fallon)]

I beg to move, That this House disagrees with Lords amendment 25.

Back in October, the Government introduced a Bill to this House that contained a number of important growth measures designed to help stimulate the economy. I am very pleased to report that both Houses of Parliament have given the Bill the priority it deserves, and that six months after its introduction both Houses have completed their consideration. We must now reach agreement with the other place on the final version of the Bill.

Let me explain that the Government agree with 38 of the 40 amendments that have been made. My right hon. Friend the Secretary of State for Communities and Local Government will address those in the second group of amendments for debate. It is right that we set out our reasons for our disagreement with the other place in two important respects.

The Government do not support amendment 25, which seeks to remove clause 27—a clause that this House supported and that would establish the new employment status of employee shareholder. I urge the House to confirm its view that this imaginative proposal should continue to be made available and clause 27 should be retained.

Clause 27 establishes a new employment status in our labour market—the employee shareholder—in addition to the existing categories of worker and employee. Employee shareholders will have more employment rights than workers but fewer rights than employees. Importantly, employee shareholders will be given at least £2,000 of shares in the company they work for, or in its parent company. The first £2,000 of value will not attract income tax or national insurance contributions, and the first £50,000 of shares will not be subject to capital gains tax.

British companies are competing in a global race to increase their competitiveness and create wealth. What is at stake here is choice and a new status that companies can use to give themselves a competitive edge and more flexibility in deciding how to structure their work force. By combining share ownership and favourable tax treatment—with appropriate steps to prevent any tax avoidance—we are giving companies, especially young companies, a tool that may tip the balance in their favour as they seek to attract high-calibre individuals who can have a disproportionately positive impact on how the company performs. That is why the Government want to create the new employment status—to promote enterprise and aspiration.

Much has been said about the new employee shareholder status. Throughout the scrutiny in this House, I stressed that we do not want people coerced into this new type of status. That is why the Government chose to add protections to the status on Report. We added protections for existing employees by creating a new unfair dismissal right and by inserting the right not to be subjected to any detriment if they turn down an employee shareholder contract. Those protections are important. They allow existing employees, if offered an employee shareholder contract, to say no, in the knowledge that the law will protect their decision.

The Government have always been clear that this measure is voluntary for both individuals and companies to use if it suits their circumstances or business needs. For people on jobseeker’s allowance, our priority is to minimise periods of unemployment by helping them to move into work as soon as possible. During proceedings in this House, I listened carefully to concerns raised by, among others, my right hon. Friend the Member for Hazel Grove (Andrew Stunell), who is in his place today. In response to the concerns he expressed in Committee, I agreed that guidance to decision makers in jobcentres would make it clear that an individual should not be mandated if there were good reasons for refusing an employee shareholder offer. However, the other place was unconvinced that this employment status would be truly voluntary for jobseeker’s allowance claimants if there was the possibility—however remote—that a claimant could lose their JSA if they turned down an employee shareholder job.

I want to make it absolutely clear that this new employment status is voluntary. That is why the Government have looked at all this again in the light of comments and speeches by noble Lords. We have decided now to remove any remaining ambiguity, which I hope will reassure both this House and the other place. I can tell the House that as a result of considering the policy further we have decided that jobcentre advisers will not be able to mandate jobseekers to apply for employee shareholder positions. The Government will amend the guidance for DWP jobcentre advisers to state explicitly that a jobseeker cannot be mandated to apply for an employee shareholder job. Draft guidance will shortly be placed in the Library.

[Andrew Stunell (Hazel Grove) (LD)]

I thank my right hon. Friend for giving way and, in particular, for having listened carefully to what was said in this House and in the other place. Will he say a little more about the guidance that will be provided, the timetable and the implementation? Can he give us an assurance that it will be in place before the Bill receives Royal Assent and comes into force?

[Michael Fallon]

I certainly can. It is not possible, under the procedures of the House, to place the guidance in the Library before I have first explained it to the House, but I will lay the draft guidance in the Library as soon as the transcript of this afternoon’s debate is available.

Let me be clear about what the draft guidance will mean. It will mean that a jobseeker cannot be compelled to apply for an employee shareholder job, nor can their jobseeker’s allowance be reduced or cut if they turn down an offer of an employee shareholder job or refuse to apply for an employee shareholder job. This explicit change to the guidance puts beyond any doubt our intention that no one should be forced into this new status.

While the benefits of the new status are considerable, it will not suit all companies or individuals—and we have never pretended that it would. It is up to companies and individuals to decide, and we have published guidance for individuals so that they fully understand the implications. That guidance sets out the employment rights associated with these jobs, the risks and rewards of being a shareholder, and other factors they may wish to consider before deciding whether to accept an employee shareholder position.

We are now, therefore, debating an employment status that is absolutely voluntary. Jobseeker’s allowance claimants will not be penalised if they do not want to apply for employee shareholder roles. Existing employees can turn down the offer of an employee shareholder contract from their current employer without fear of suffering a detriment or being dismissed if they say no.

[Julian Smith (Skipton and Ripon) (Con)]

Will the Minister confirm that there has been great excitement in many areas of the business community, especially in smaller tech companies, which is a positive reinforcement of the Government’s enterprise policies? We should pay tribute to the Minister for bringing this exciting proposal forward.

[Michael Fallon]

I am grateful to my hon. Friend. We have never specified the type of company that is most likely to take up this new status, but obviously younger companies at the beginning of their lives will be able to use this status at a time when they might not be able to pay their staff more than competitor companies, or those already established in the marketplace. They will therefore have an extra edge to offer to those individuals whom they wish to recruit. We have had much interest already from such companies, who see the new status as an exciting way to motivate their new work forces.

Protections for people do not end there. The Bill confirms that someone can be an employee shareholder only if they are given at least £2,000 worth of shares, and if they are not the person will not be an employee shareholder and will have all the normal employment rights that are associated with employees.

Clause 27 also stipulates that a person can be an employee shareholder only if they receive fully paid up shares. This means that the employee shareholder will not be liable for any debts should the company fold. Of course there will be circumstances where an employee shareholder leaves the business. It should be apparent from all that I have said that it is not the Government’s intention that employee shareholders are left with shares that they can sell back to the company only at prices that are unfair or where the buy-back arrangement would leave the employee shareholder at a financial disadvantage if there is no other way of disposing of the shares for value.

On Report in this House, we introduced an amendment to make a power to allow the Government to set a minimum value for the buy-back of shares if the company and employee shareholder enter into a buy-back agreement. That reserve power will be used, if it is needed, to safeguard employee shareholders in the unlikely event that employers behave unscrupulously. By including these protections we are ensuring that individuals understand the implications of employee status and are genuinely free to decide whether to accept it. No one can be pressurised, bullied or coerced into accepting this new status.

With this announcement of further explicit protection for jobseeker’s allowance claimants, I urge hon. Members to disagree with the other place and reinsert clause 27 into the Bill. The new employment status gives young companies in particular a new option that they can use to attract high-calibre individuals to help grow their business. It is important that we give companies that choice, but it is also important that we give people this opportunity to share in the growth potential of the company they work for. The clause should be part of the Bill.

[Mr Chuka Umunna (Streatham) (Lab)]

The Opposition agree with Lords amendment 25, which seeks to remove the part of the Bill that provides for the new status to which the Minister referred.

Let me start by making an observation. We are debating the Bill the day before many in the country will pause to observe the funeral of the late Baroness Thatcher. Coincidentally, in supporting the Lords amendment to dump the Government’s proposal, we find ourselves in the extraordinary position of being on the same side of the fence as at least four of her former Ministers: Lord Lawson, Lord Forsyth, Lord Deben and Lord King. The reason for this unusual state of affairs is simple. Notwithstanding the admittedly notable concession that the Minister has just given, this is an ill-thought-out and bad idea, and that is why there is strong cross-party opposition. Lord Forsyth put it well in the Lords when he said that the proposal

“has all the trappings of something that was thought up by someone in the bath”.—[Official Report, House of Lords, 20 March 2013; Vol. 744, c. 614.]

I have to say that I agree with Lord Forsyth on another matter, too. I cannot understand why my opposite number, the Secretary of State for Business, Innovation and Skills, the right hon. Member for Twickenham (Vince Cable), who I note is not here today, is going along with this. The Business Secretary engaged in some considerable media in respect of the Beecroft proposals, and said how outrageous they would be. I am, of course, aware that the Minister perhaps has a different view. As Lord Forsyth said, at least Beecroft did not take away entitlement to redundancy payments. This is worse than Beecroft because it does.

There are a number of reasons why we support the Lords amendment. They were all mentioned in the other place and we wholeheartedly agree with them. First, this is supposed to be a “growth” Bill. No evidence whatever appears to have been adduced by the Government to show how this measure would boost growth. The attitude of businesses, at its most generous, is divided; at its worst, it is overwhelmingly opposed to the measure. In the latest published survey of 700 companies by Barclays Corporate, which was published this week, the proposal appears to find favour with just 25% of respondents. In the Government’s own consultation, only five businesses out of the 200 responses received showed any interest in taking up the scheme.

Secondly, why connect employee ownership, for which there is widespread support in all parts of the House, with giving up rights to not be unfairly dismissed, redundancy pay, flexible working and time off for training? No coherent answer has been provided by the Government during the Bill’s passage through this House or the House of Lords. In fact, as the Conservative Baroness, Lady Wheatcroft, said, their proposal simply risks giving employee ownership a bad name. After all, if businesses with employee shareholders are looking to carry out a redundancy programme, who are they likely to let go first?

[Nick de Bois (Enfield North) (Con)]

The hon. Gentleman gives me a choice of things to argue about, but I will pick up on just one—the survey. He refers to 25% of companies supporting the measure. He is overlooking the fact that it is designed to attract small and medium-sized enterprises—niche companies. It will never enjoy full use by 100% of companies. We should focus on the small businesses that will take advantage of it and become tomorrow’s medium and large enterprises.

[Mr Umunna]

With the greatest respect to the hon. Gentleman, my understanding is that the survey was conducted among the very businesses to which he refers. As far as I am aware, the Government have not claimed that it is specifically for small businesses. I am happy to be disabused if I have got that wrong.

Thirdly, the proposal could do immense damage to workplace relations and to the standing of business more generally. I say that from a common sense point of view and as an employment lawyer. What on earth are employees to think if suddenly, out of nowhere, their employer says, “Will you give up all your fundamental rights in this workplace if I give you some shares?” What signal will that send to the employee? [Interruption.] The hon. Member for Skipton and Ripon (Julian Smith) says from a sedentary position that it is voluntary, but what does that say about one’s relationship with an employer if they are talking about taking away fundamental rights at work? As Justin King, CEO of Sainsbury’s and until recently a member of the Prime Minister’s business advisory group, said, what will the population at large think of businesses that want to trade employment rights for money?

Fourthly, and this applies more generally to the Government’s moves to destroy the unfair dismissal regime, removing people’s rights to claim unfair dismissal, or a redundancy payment for which compensation is capped will simply increase the likelihood of employers facing spurious discrimination claims brought against them, for which compensation is unlimited. That was a point made by Baroness Brinton in the other place.

If an employee is to be offered this special type of employment status, it is important that they should be able to access proper advice on it, particularly in this climate when jobs are few and far between. That point was made by the noble and learned Lord Pannick, who proposed the amendment. The Government have refused to accept that statutory rights should be lost only if the agreement is in writing and the person concerned has received proper independent legal advice on its consequences. That is how it applies in relation to compromise agreements.

Then there is the issue of the shares themselves and tax. How on earth are these to be valued, particularly given—if the hon. Member for Enfield North (Nick de Bois) is right that the measure is aimed at small companies—that many are unquoted. How will the value of shares be determined without incurring exorbitant fees that would render the whole exercise worthless? According to the Treasury, it will cost the Exchequer £l billion by the end of the forecast period, but the true cost may well be more because, as the Treasury’s December 2012 policy costing document says, it is hard to predict how quickly the increased scope for tax planning will be exploited. That point was picked up by Paul Johnson, the director of the Institute for Fiscal Studies, who said that

“just as government ministers are falling over themselves to condemn”

tax avoidance

“that same government is trumpeting a new tax policy that looks like it will foster a whole new avoidance industry.”

[Andy Sawford (Corby) (Lab/Co-op)]

My hon. Friend is absolutely right to raise the issue of tax avoidance. Is there not also an implication for lower paid workers? The Minister has just told us that only the first £2,000 of shares will be exempt from PAYE and national insurance. Does that not mean that workers with, say, £4,000-worth of shares will be hit with a tax bill?

[Mr Umunna]

That is absolutely right.

My final and principal objection to the proposal is this: last November, I put it to the Business Secretary in this House that an employer in his Twickenham constituency would, under these arrangements, be able to make acceptance of job offers conditional on people agreeing to accept employee owner status. He denied that that was the case, yet patently the arrangements allow for it. The risk in the current jobs market of people being pressurised, or feeling under pressure, to take jobs with this type of status will be increased.

I am pleased about the Minister’s concession today. I raised the point with him on Report, but did not get the kind of assurance or concession that he just gave, and it is good that he gave it. Lord Forsyth said he was astonished that the coalition was even thinking of bringing forward a measure under which people could have their right to jobseeker’s allowance withdrawn if they did not accept a job on this basis. Of course, we will need to study the guidance. We have not seen it yet, and the first we heard of the concession was from the Minister just now. Notwithstanding the concession, however, and for all the reasons I have just given, we continue to support Lords amendment 25.

[Nick de Bois]

I am grateful for the opportunity to highlight a couple of points in favour of the Government’s measures. Judging from the comments of the hon. Member for Streatham (Mr Umunna), obviously the Opposition see this fundamentally as an attack on rights, whereas I see it as a chance to empower individuals and workers to become owners and shareholders and to move from employment to entrepreneurialism, which should be encouraged, not fraught with fear.

[Mr Umunna]

I absolutely agree with the hon. Gentleman, but I fail to understand why we have to withdraw people’s rights in order to achieve that.

[Nick de Bois]

I will come to that. I know that the hon. Gentleman has a history in corporate mergers and acquisitions. When I started my business some time ago, engaging with individuals and offering them a stake in my business was fundamental. It was all about the people I worked with, so I gave away shares to individuals to whom I wanted to give them in order to make them part of the company. I did not have the advantage of what is being offered today, but neither did I have the disadvantage of the market we are in today. Back then, we had not seen the massive increase in employment regulation that came in from Europe under the previous Government.

[George Freeman (Mid Norfolk) (Con)]

My hon. Friend, like me, has experience of running small businesses. On the connection between rights and responsibilities in a small company, does he agree that it is fundamentally in start-ups and micro and small businesses, where regulations and red tape hold back progress, that we need to help employees to understand the link between the two? Furthermore, does he agree that that is why the measure has been welcomed by entrepreneurs and senior business people, such as Brent Hoberman, the co-founder of Lastminute.com, and Stuart Rose from M&S? Brent Hoberman said that this imaginative new proposal would be welcomed by British entrepreneurs and entrepreneurial employees alike and that it will encourage workers to be company owners and give fast-growing businesses more flexibility in return.

[Nick de Bois]

I agree. The point I am trying to make, in as balanced and fair a way as I can under the circumstances, is that, like many people, when I started a business I did not worry about employment rights and legislation. I tackled it with enthusiasm; I went for it. When I did that, however, in the late ’80s, I did not have to think about the issues that are now facing many people and which are now at the forefront of their minds. That is why I welcome the proposal.

I want to stick to my main premise, in response to the comments from the hon. Member for Streatham. I do not believe that anyone will lightly give up shares in a business. It is not something that employers do. They give shares up only in return for value, and they get that value from people or by selling them. It is perfectly reasonable to assume that employers will look for value from what they give up. As he will know with his background, however, we also have to bear it in mind that by transferring shares, employers also transfer rights—in contrast to what he said about employment rights—under the Companies Act 2006, which was introduced by the last Government, which enhanced the rights of minority shareholders, such as on matters of prejudice. Employees can even form quasi-partnerships through small minority shareholding. Employers do not lightly give up shares, and when they do, they actually give rights to individuals.

[Mr Umunna]

I do not disagree with that.

[Nick de Bois]

If the hon. Gentleman wants to intervene, I would be happy to take up his point.

13:15

[Mr Umunna]

I do not disagree with many of the hon. Gentleman’s points, but I still fail to understand—he will have to forgive me—why, despite what he says, we need to link giving up shares and allowing employees to participate in the way he describes with taking away their fundamental rights at work.

[Nick de Bois]

I hope that the hon. Gentleman will understand, as I am sure he does, that the best chance of success for a micro niche business—the people who will benefit from this measure and become tomorrow’s medium businesses—is to be in the most flexible market possible. The supply side has to be flexible, so that employers can afford to take the risk.

These very modest removals being offered to individuals—they will not be compelled to take them—will be attractive to entrepreneurial, non-risk-averse employees as well as to small, flexible business leaders wanting to start a business.

[Andy Sawford]

The hon. Gentleman makes the point—it is a legitimate point, but I happen to disagree with it—that these regulations are over-burdensome. One person’s regulation is another person’s basic employment protection. The critical issue, however, is surely the link. His argument might well be worth hearing in this place, but why link the two? That is the critical issue that my constituents do not understand.

[Nick de Bois]

The biggest step someone takes when they start a small business is employing someone. They cease to be a sole trader working in their own environment; their own boss without responsibility for anyone else and having to meet only their own needs and those of their family. They do not want to take that step chained by too many onerous responsibilities too early on. They seek therefore to strike a deal with their investor or partner, and in return for that flexibility they do not ask for a single penny in cash to invest in the business. That is a good deal. I would have taken it, had it been on offer to me and had I faced these regulations.

[Julian Smith]

My hon. Friend is describing very effectively the challenges facing a new small business. Does it not surprise him that the Opposition, particularly the shadow anti-business Secretary of State, are so negative about these supply-side changes?

[Nick de Bois]

I am not surprised that the hon. Member for Streatham, who speaks very eloquently, expresses his support for employee and share ownership, but neither am I surprised that while expressing their support the Opposition will probably vote against it.

I want to leave the House with one thought. We all want Britain to succeed. We know, from the statistics that we have traded across the Floor many times, that growth will come from the small and medium-sized enterprises that dominate our economy. The small businesses that I believe will take up this offer—I believe the Government also recognise this—will become the medium enterprises that are so critical to our growth.

[Mr David Ward (Bradford East) (LD)]

One of the most significant features of the current recession has been the flexibility in the labour market. In contrast to the ’80s, when there were widespread redundancies, as people were just laid off, we have seen remarkable flexibility and partnership between management and employees, with reduced working hours and pay. It has been a great tribute to employees and management. That flexibility has been proven to work. Would not the temptation be, under these proposals, simply to get rid of those staff?

[Nick de Bois]

No responsible employer would ever relish the prospect of losing the experience that he has invested in to help to develop his business. I have had the pleasure of offering people jobs and of recognising that in some cases, if they have come from unemployment, it can be a life-changing experience for them. However, I have also shared the pain of having to lose people, often through no fault of their own, and I will take no lectures from anyone about how employers relish losing people. It does not happen.

[John McDonnell (Hayes and Harlington) (Lab)]

I want to make four simple, brief points. The first is about share ownership. I tabled amendments when the Bill was debated in this House to try to extend share ownership without connecting that with the loss of rights. It is noticeable that the Government opposed those amendments. As people look to reconstruct the economy and learn the lessons from what has happened in this economic crisis, there is a genuine willingness to look at greater involvement by the work force in the management of companies. Part of that is about extending share ownership to workers. That is a development that we have welcomed in both Houses. The problem is that linking the two things in this way will not act as an incentive for companies to recruit the best; in fact, it will act as a deterrent. If someone faces the choice of going to a company that offers them share ownership without the loss of rights, they will go to that company. If they have the opportunity of going to a company where they will have to sell some of their rights, that will obviously act as a deterrent.

[Andy Sawford]

I agree with my hon. Friend’s point about workers in that situation, but we should also challenge the account that is being given about how attractive this measure will be to small businesses. I have run a small business. The idea that I would have to work out the tax and other implications of this measure with my work force when I had far more important things to do—building a good, strong work force and running a business—does not stack up to me.

[John McDonnell]

I was going to make that point. There is an element of complexity in this scheme which will lead to small businesses coming to us in about six months’ time and saying that it is part of the overburdening of regulation.

[Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)]

On that point, the assumption has been made that all employees will opt for this status, but in many cases some workers will, while others will refuse, leading to two types of worker in the same business and even more complexity for the very small businesses that we are trying to support.

[John McDonnell]

That leads on to my second point—I do not want to delay the House. This measure opens up the process of recruitment, retention and promotion to potential victimisation and abuse. Despite the formal protections that the Government assure us will be put in place, the reality is that informal pressures will be put on those who wish to be recruited, retained or promoted and these will override the formal protections. Those who have represented people at tribunals and elsewhere will know that it is extremely difficult to prove victimisation and bullying in the work force. Those informal pressures will eventually undermine the credibility of the scheme. My fear is that they will also undermine the credibility of employee share ownership schemes overall.

Thirdly, I look forward to reading the draft regulations and guidance on protections for jobseeker’s allowance. However, ministerial statements on JSA protections in recent months, as recorded in Hansard, have proved not to be worth the paper they are written on. I refer to assurance after assurance we were given that there were no targets for sanctions in individual jobcentres, when we now have concrete evidence that that is the case. Ministerial assurances on the operation of JSA have so far not proved to be effective. I believe that, at the end of the day, they will prove not to be effective in this case either, because the same informal pressures will be put on jobcentre workers to meet targets for sanctions overall.

Finally, this measure sets an extremely dangerous precedent. The idea of selling rights could creep into other areas of policy making. For example, will landlords in future be able to offer reduced rents for reductions in security of tenure? Will consumer rights be sold for a reduction in the price of particular goods? That is much more significant than the scheme being proposed in this debate. The idea that rights can be sold in any sphere of government activity sets a dangerous precedent for the future development of rights in this country.

[Julian Smith]

Does not the hon. Gentleman agree that businesses throughout Britain have been laden down with regulation, particularly in employment, and that we have to try constantly to make it easier for them to take people on, particularly at the moment, when we need to do that to create jobs?

[John McDonnell]

With the greatest respect to the hon. Gentleman, I disagree. We have heard this argument about the overburdening of regulation year after year, and it is usually used as a justification to give employers the facility to sack people, cut their wages or undermine their employment rights.

[Jonathan Edwards (Carmarthen East and Dinefwr) (PC)]

Did not the last intervention let the cat out of the bag? This is essentially about deregulating the labour market via the back door.

[John McDonnell]

It is, but I was trying to be a bit more subtle about the process of allegation—I appreciate that it does not really suit my style of speaking.

The point I am trying to make is that, in addition to the process of selling rights, the scheme will not just be unworkable—because its implementation will increase burdensome regulation even more, as my hon. Friends have said—but will act as a deterrent against positive moves towards the development of share ownership and worker engagement in companies. On that basis, I think that, apart from being iniquitous, this measure will be counter-productive. That is why I wholeheartedly agree with the points my hon. Friend the shadow Secretary of State made in support of the Lords amendment.

[Julian Smith]

I want to speak briefly in support of my hon. Friend the Member for Enfield North (Nick de Bois) and talk about the narrative that is developing among Opposition Members. We heard the same bleating for settlement agreements and we have heard the same rhetoric for these proposals. We have heard no tangible idea from the Opposition of how we might make life easier for the thousands of small businesses in North Yorkshire that are creating the bulk of the jobs in my constituency or for the tiny companies across the UK that are struggling with the six regulations a day that Labour piled upon them.

The proposals that we are discussing are part of a suite of proactive measures to make business easier in this country. Business was laden with regulation, taxation and more and more bureaucracy by the Labour party in power. We—our party and this Government—are doing absolutely the right thing by looking at every opportunity to find ways to make life a bit easier for the hard-working men and women who are waking up in the middle of the night, worried about whether they can pay staff the next day. I commend these proposals and the others that the Government are making across the range of their enterprise policies.

[Mark Lazarowicz]

I, too, would like to say a few words about this proposal of shares for rights. Of the various types of employment legislation that have come before this House over the years—these provisions are basically employment legislation—there can scarcely have been any with as few friends, on either side of industry. I welcome the fact that the House of Lords did its revising job well and removed the offending clause. I am only sorry that the coalition parties, Conservative and Lib Dem, have chosen to bring it back today, instead of withdrawing quietly and gracefully.

Given that this provision has so few friends, I suspect that very few employers will want to make use of it. That is because employers who want to extend employee share ownership, of which I am a great supporter—the year after I entered this House I introduced a private Member’s Bill to promote it—will not want to do so in ways that force their employees to give up important rights at work. The type of employer who wants to work with their employees is not likely to be one who at the same time wants to alienate them by taking away their rights, which is what this measure would force such employers to do if they made use of it. Of course, it is hard to see any employees volunteering to adopt such an arrangement either. I suspect that employers who would make use of the measure would be those who are in difficulty.

I take the point that was made earlier about businesses that want to start up and take on more workers making use of the scheme, but the problem is that, although a new business could behave with the best will in the world in involving its workers in a collective enterprise, it will be when things go wrong and people fall out that those workers will need the protection that is enjoyed by the workers of this country. That is why we should be loth to throw that protection away.

13:31

One objection has involved the suggestion that tax dodges and loopholes could be taken advantage of as a result of the measure being introduced. The Government say that they will ensure that that does not happen, but we all know that tax lawyers will find new ways round legislation and that Governments will have to try to catch up with them, no matter what measures are introduced to prevent that from happening. I suspect that, in a couple of years’ time, measures to deal with new loopholes and tax dodges will have to be quietly introduced in a Finance Bill, in the hope that no one notices the embarrassing results of the changes.

There is a possibility that the scheme will lead to a growth in the number of workers with fewer rights, and to the deregulation of the labour market to which the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards) referred. If that were to happen, it would be insidious to see a spread of businesses or employers giving up some of the most important rights to be won by workers and their trade unions over many decades. Incidentally, a different Liberal party was proud to speak up for those rights in the past, but in its current guise it seems happy to see them taken away.

It is also foreseeable that businesses making use of the scheme might eventually have to implement redundancies and lay-offs in which people lost their jobs. It is precisely at such times that the potential for legal challenges would arise. I do not have time today to go into all the possibilities, but it does not require much imagination to understand the prospect of all sorts of legal challenges—

[Mr Speaker]

Order. I do not know whether the hon. Gentleman is interested in hearing a few seconds of reply. He is not obliged to be interested, but if he is, he will need to resume his seat.

[Mark Lazarowicz]

Thank you, Mr Speaker. I shall end by saying that I hope the House will not support the Government’s proposals today.

[Michael Fallon]

With the leave of the House, I should like briefly to respond. I am afraid that we have had a fairly predictable debate today. We have heard the voices of the employment lawyers on the Opposition Benches, and the voices of entrepreneurs on this side of the House. I have made it absolutely clear that the proposed status will be entirely voluntary and optional, and I have introduced a further change today to make it absolutely clear that those who are on jobseeker’s allowance will be fully protected. Nobody has to take up this status. Nobody can be harassed or bullied into taking it up, but there are plenty of businesses that are ready and willing to do so.

I should like to finish by citing Miss Becky McKinlay, who said that she would have welcomed such a scheme when she set up her company six years ago, because she could not afford to outbid her peers on wages. Her company is called Ambition, and we should be ambitious—

13:33

Forty-five minutes having elapsed since the commencement of proceedings on consideration of the Lords amendment, the debate was interrupted (Programme Order, this day).

The Speaker put forthwith the Question already proposed from the Chair (Standing Order No. 83F), That this House disagrees with Lords amendment 25.

13:33

Division 202

Ayes: 277

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Conservative: 234
Liberal Democrat: 41
Independent: 1

Noes: 239

---

Labour: 220
Democratic Unionist Party: 4
Scottish National Party: 4
Plaid Cymru: 3
Liberal Democrat: 3
Social Democratic & Labour Party: 2
Independent: 1
Alliance: 1
Green Party: 1

After Clause 4

Development orders: development within the curtilage of a dwelling house

[The Secretary of State for Communities and Local Government (Mr Eric Pickles)]

I beg to move, That this House disagrees with Lords amendment 7.

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

With this it will be convenient to discuss Lords amendments 1 to 6, 8 to 24 and 26 to 40.

[Mr Pickles]

I agree with amendments 1 to 6, 8 to 24 and 26 to 40, but I ask the House to support the motion to disagree with Lords amendment 7.

I would like to thank the noble Lords for their well-informed debates since this Bill passed to the other place just before Christmas. Those debates brought about a number of positive changes, and we are happy to support a significant number of them. I recognise the constructive proposals put forward in particular by Baronesses Byford and Parminter and by Lords Jenkin of Roding, Tope, Shipley and Greaves on the Government Benches; by Lord Best and the Earl of Lytton from the Cross Benches; and, indeed, by Lord Berkeley on the Opposition Benches.

The amendments to clause 1 take into account the very poor performance of a small number of authorities in failing to meet statutory deadlines. They confirm that designation can be made only on the basis of inadequate performance in the determination of major applications and that the criteria of those designations must be laid before both Houses of Parliament before coming into force.

On report in this House, in response to arguments put forward by my right hon. Friend the Member for Hazel Grove (Andrew Stunell) as well as by the right hon. Member for Greenwich and Woolwich (Mr Raynsford), the Government made a commitment to amendment 12 to exempt rural exception sites from the provisions of clause 6 on affordable housing. In addition, we have always said that we intend clause 6 to be a temporary measure to unblock existing stalled housing developments, and we were happy to introduce an amendment to ensure that the sun would set on it on 30 April 2016.

We have made clear that the Planning Inspectorate’s assessment of the viability of a particular scheme will be independent, and that any evidence on which inspectors rely in their discussions will be made public. We also support the amendments that will guarantee consistency with existing mayoral planning powers relating to applications that are of strategic importance in London.

[Simon Hughes (Bermondsey and Old Southwark) (LD)]

I thank the Secretary of State for announcing an important measure that will deal with the mischief of many years during which people were unable to know what arguments developers were advancing for the delivery of less than the locally affordable housing limits. It will allow us to hold to account, publicly, developers as well as local authorities.

[Mr Pickles]

I agree. It will ensure that important information is provided where it should be provided, within the community.

Lords amendment 15, which amends clause 8, constitutes a direct response to points made with passion and persistence by Lady Parminter, and also by the English National Park Authorities Association, about the precise drafting of our proposal to accelerate the roll-out of superfast broadband coverage. The amendment will ensure that we retain important safeguards that will continue to protect our national parks and other protected areas.

I hope that the House will support Lords amendment 8, which will simplify the process of making local development orders; Lords amendment 16, which will reduce the period of grace for the registration of town and village greens from two years to one; Lords amendment 23, which will remove ambiguity from development consent orders; and Lords amendment 24, which will enable the Mayor of London to delegate his planning responsibilities.

Let me now deal with the important issue of permitted development rights for home owners. The proposal in question was not part of the Bill as introduced in the House of Commons. I overheard one of my right hon. Friends expressing a desire to vote against it and claiming to have voted against it persistently during all the Bill’s stages in the Commons, but I must point out that this is the first occasion on which it has been before us. It stems from an amendment tabled by Lords True, Tope and Lytton, and I know that it has engaged the interest of many Members of the House of Commons as well. I am grateful for the opportunity to debate the way in which the planning system strikes a balance between the rights of home owners to improve their homes and the right of the state to specify the improvements that they are allowed to make.

Let me now quote, with considerable approval, from a document which states:

“No one today would assert that property rights should be unrestricted but…those restrictions must always be justified and remain as limited as possible… many planners who have grown up with the view that the property owner is only one stakeholder among others. There are too many who act as if they believe that most people cannot be trusted to make decisions themselves without the superior advice and judgement of professionals. Some councillors, too long on planning committees, react to a restatement of the inherent rights of property by fearing loss of control! It is that word which is the key.

Too much planning has become development control… the time and trouble that has been spent on dealing with planning applications for extensions and additions, porches and garages…cannot be seriously said to have been cost-effective.”

Those are the magnificent words of my hon. Friend the Member for Richmond Park (Zac Goldsmith), together with those of John Gummer, in the wonderful Quality of Life policy group report, published in 2007.

[Mr Stewart Jackson (Peterborough) (Con)]

I am sure my right hon. Friend agrees that the local government family is like the curate’s egg: good in parts, but bad as well. Does he agree, however, that the issues that he has raised would have been ventilated much more effectively had the consultation period been longer—along with the Cabinet Office guidelines—and had the Department itself arrived at a settled consensus in response after 16 weeks? Unfortunately, that has not happened.

[Mr Pickles]

I do not know about the curate’s egg, but I have always regarded local government as an omelette of happiness and consensus. I hope that by the time I sit down, I shall have spun together a dish that the hon. Gentleman can happily tuck into.

[Paul Burstow (Sutton and Cheam) (LD)]

Will the Secretary of State give way?

[Mr Pickles]

I will, of course, give way to the right hon. Gentleman on the matter of omelettes.

[Paul Burstow]

Can the Secretary of State explain why, even at this stage, it was not possible to provide an executive summary of the findings from the consultation? Why must the House wait until May to find out whether people are in favour of the proposal or against it?

[Mr Pickles]

Obviously we will provide the information when the regulations are laid. That is normal Government procedure.

Having poured praise on my hon. Friend the Member for Richmond Park—

[Zac Goldsmith (Richmond Park) (Con)]

Will my right hon. Friend give way?

[Mr Pickles]

I must!

[Zac Goldsmith]

I stand by the words that my right hon. Friend quoted so eloquently earlier. There are certainly ways in which we could simplify the planning system; I do not think anyone disputes that. However, given that 90% of applications are already successful, surely removing people’s right to object will simply guarantee that the remaining 10%—the most contentious, un-neighbourly, antisocial developments—proceed as well, causing unnecessary conflict between neighbours.

[Mr Pickles]

I think that it would be best for my hon. Friend to wait until the omelette has started to settle. He may care to cross-examine me further then.

[Tim Loughton (East Worthing and Shoreham) (Con)]

I do not know about omelettes, but the Secretary of State is making a very soft-boiled case for supporting the Government, and I am really trying hard. I do not know about him, but I hear complaints from many of my constituents, at my surgeries or through local councillors, that their neighbours have extended the remit of their planning permissions in terms of height, length or type. How many more complaints does he think will be made to us when planning permission is no longer required for a development that a neighbour would regard as completely unacceptable and antisocial?

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. We must have shorter interventions.

[Mr Pickles]

When I became Member of Parliament for Brentford and Ongar, my predecessor gave me a single file and two pieces of advice. The first was that when the sun rose I should always be found in my own bed, and the second was “Never, in any circumstances, become involved in planning.” Since then, I have been made a Planning Minister. My advice to my hon. Friend is not to become too heavily involved in disputes between neighbours.

[Several hon. Members]

rose—

[Mr Pickles]

If hon. Members will let me make a little progress, they will be able to hear what I am suggesting.

I believe that there is broad agreement on the need for greater flexibilities and freedoms for home owners. It is merely a question of detail, and that detail is contained in planning regulations—secondary legislation—which both Houses will be able to consider in due course, separately from the Bill. However, the Government cannot support Lords amendment 7, which seeks to use the sledgehammer of primary legislation to change the details of planning regulations. The amendment would introduce a wholly new principle allowing local planning authorities to view national householder permitted development rights as completely optional, which would constitute a significant extension of state power over private property rights. It is also unnecessary, because a mechanism for responding to exceptional concerns in particular areas already exists.

In 2008, the previous Government extended permitted development rights for home owners—from roof extensions to rear extensions. That did not result in neighbourhood wars; nor did it mean the end of local planning. We believe there is a case for further sensible, practical reforms. In those changes, article 4 powers were reformed, and they were amended in 2010 to give greater local discretion.

14:00

We have always recognised that there will be some areas where national permitted development rights will sit less comfortably and that local authorities should be able to carve out an exemption following appropriate consultation. They can do so by making an article 4 direction. Over 270 directions have been made since 2010.

The Local Government Association has suggested that article 4 directions are not enough, yet there is no real evidence base to suggest that. Councils have powers to make directions to withdraw householder permitted development rights with immediate effect. Immediate directions must then be confirmed by the council following local consultation within 12 months.

A second issue raised is that the council must pay compensation costs if less than 12 months’ notice is given. Compensation would be payable only where a planning application is subsequently refused or conditions are imposed, and a claim for compensation is made relating to householders’ abortive expenditure or other loss. In this case, such loss is likely to be minimal.

Indeed, more broadly, the LGA has not provided evidence on the extent to which councils have been forced to pay out any compensation under the current article 4 regime. I regret that. After an extensive search through correspondence, we can find no example of a local authority reporting to the Department that it has been forced to pay compensation.

The third issue raised by the LGA is that article 4 directions have to be used across an entire use-class. That is not relevant to the matters we are discussing today, which are to do with householder permitted development rights. Importantly, article 4 directions have been made, and can continue to be made, in respect of individual elements within the householder permitted development rights. This is not a blunt tool and can be tuned to local circumstances.

I have not intervened in any article 4 direction since May 2010. We have committed to working with the LGA to update our article 4 guidance as part of Lord Taylor’s review, to ensure that the process is as clear and straightforward as possible.

[Bob Blackman (Harrow East) (Con)]

Article 4 directives are generally used for enforcing restrictions in conservation areas, which is why they are quite restrictive, but this proposal would constitute a major extension of their use. How does my right hon. Friend propose that local authorities would recover the costs associated with that? As I understand it, they are not at present permitted to charge for those costs.

[Mr Pickles]

This is a normal administrative process. I will check with my ministerial colleagues, but I believe a London borough—Barking, I think—is currently putting out a consultation with regard to article 4 and betting shops in the area.

There is a misunderstanding here. Where this measure relates to a sole property, we would expect notice to be served, but where it is served generally to an area, the normal process by which we inform the public about planning applications, decisions and appeals would apply.

[Robert Neill (Bromley and Chislehurst) (Con)]

I agree that to permit a local authority to opt out entirely from permitted development measures would be draconian, but does my right hon. Friend accept that there are underlying concerns that article 4 directions may not operate as well in practice as in theory? Is he therefore prepared to consider what further steps might be taken by his Department and local authorities to refine the way in which the article 4 system works?

[Mr Pickles]

Absolutely, and that is why we are looking towards Lord Taylor’s advice in respect of tweaking the article 4 process. It has undergone a number of changes. It changed under the last Government in 2008, and we made a change in 2010, so article 4 is not set in concrete—it is not buried under a back patio.

[John Hemming (Birmingham, Yardley) (LD)]

Does my right hon. Friend accept that one reason why no compensation has been paid under article 4 is that local authorities are frightened to issue article 4 directives under which they may have to pay compensation?

[Mr Pickles]

I have enjoyed campaigning with the hon. Gentleman on other issues, but I have to say he is being highly speculative here, as there is no real evidence of such a self-denying ordinance by local authorities.

[Mr Charles Walker (Broxbourne) (Con)]

rose—

[Mr Pickles]

I am about to use honeyed terms to try to placate my colleagues who have concerns, but before I get to that dramatic moment, I will give way again.

[Mr Walker]

I do not want to keep my right hon. Friend from reaching that dramatic moment because I should observe that my Whip said I was going to hear honeyed words and an outbreak of common sense from those on the Front Bench. Some might uncharitably call that a Government climbdown, but I would describe it as listening to the concerns of Back Benchers.

[Mr Pickles]

rose—

[Mr Clive Betts (Sheffield South East) (Lab)]

rose—

[Mr Pickles]

And before the honeyed words arrive, I can think of nobody more appropriate to give way to than the emollient Chairman of the Select Committee.

[Mr Betts]

I am still struggling with understanding why the Secretary of State is resisting amendment 7 and instead arguing in favour of article 4. He says the amendment’s scope is far too wide, but that article 4 is there to be used instead. Are there therefore certain circumstances in which authorities may want to opt out of permitted development rights under amendment 7, but would not be able to use article 4? If so, what are those circumstances?

[Mr Pickles]

Well, one might be concerned that this might be misrepresented as a money-raising exercise—a nice little earner—for local authorities, and that it would be in their financial interests for us to accept amendment 7. It is important that the British public—or the English public in this case—have confidence in the planning system.

[Mr John Redwood (Wokingham) (Con)]

I would like a little more information. Will the Secretary of State give us his forecast of how many extra extensions we would get in the first year under his proposal, and how many might be lost with the amendment?

[Mr Pickles]

My right hon. Friend recognises that this represents a boost to industry. [Interruption.] I am sorry if the idea of helping local builders and do-it-yourselfers and people who earn their own living is regarded as unimportant.

[Lyn Brown (West Ham) (Lab)]

rose—

[Mr Pickles]

I feel that, somehow, I am returning to confrontational type, and I must avoid that, so let me say the honeyed words, and then I will consider giving way to the hon. Lady.

Notwithstanding my comments on this amendment, I appreciate that there is the separate issue of the detail of the Government’s planned reforms to permitted development rights. I am grieved and distressed that Lords and Members—on both sides of the House—who I would normally look to for advice, guidance and support on planning issues have concerns, so we have listened to them. The Planning Minister and my other ministerial colleague, the right hon. Member for Bath (Mr Foster), have met colleagues from this House to hear their views, and I believe that even at this late hour we can establish a broad consensus on these practical reforms. We will listen carefully to the debate this afternoon—this is, of course, the first opportunity the House has had to debate the matter—reflect on all the points raised and consider in detail the representations made in the consultation on the secondary legislation.

I can announce today that in the spirit of consensus we will introduce a revised approach to the contentious question of permitted development rights for home extensions when the Bill returns to the Lords. If we cannot persuade the other House, the issue will return to the Commons next week so that hon. Members can debate and vote further. Given the discussions I have had with colleagues who have concerns, I believe that the problem is eminently bridgeable. I would like the opportunity to build that bridge.

[Sir Peter Bottomley (Worthing West) (Con)]

I am grateful to the Secretary of State for giving way, and I think that most of us have listened carefully. May I suggest that the ideas put to the other House might, when they come back to this House, be more acceptable than the proposal in front of us?

[Mr Pickles]

My hon. Friend has, in his succinct way, put the case better than I have.

[Mrs Cheryl Gillan (Chesham and Amersham) (Con)]

I appreciate the seriousness with which the Secretary of State has considered the representations made by Back Benchers to him and his Planning Minister, which is shown by the fact that he is dealing with this group of amendments himself. I am grateful to him for that. However, will he forgive me if I am sceptical and want to wait to see his proposals? This question has caused a great deal of grief to my district council, Chiltern district council, and to many councils across the country and I am afraid that we will not believe what he says at that Dispatch Box until we see the proposals in black and white.

[Mr Pickles]

Of course, I am cut to the quick by my right hon. Friend’s remarks. She does not need to rely on my persuasion, however, because no matter what happens the issue will come back to this House for consideration.

[Zac Goldsmith]

I thank my right hon. Friend for giving way and welcome his decision to rethink the policy, but given that Lord True’s amendment is modest, it is hard to know what further compromise the Government might accept. Will the Secretary of State provide greater clarity about what he is proposing before we are asked to vote?

[Mr Pickles]

Considering that I quoted a good page and a half from an excellent document that is, I hope, still in print, I am not entirely sure that the Dispatch Box is the right forum from which to attempt to negotiate the consensus I seek. My hon. Friend has absolutely nothing to lose. He will be involved in the discussions and we will seek to try to reach a sensible compromise. If he does not like it, he can go into the other Lobby and say that he was right all along.

[Miss Anne McIntosh (Thirsk and Malton) (Con)]

I hope that my right hon. Friend will take this as a helpful intervention. When I was shadow floods Minister, I, in my humble capacity, and the environment, food and rural affairs team worked very closely with the local planning shadow team. We were very concerned about the flood implications of tarmacking over our drives and building extra conservatories. Will my right hon. Friend give the House an assurance today that that important aspect of the question has been considered?

[Mr Pickles]

I well remember wandering through the flooding in my hon. Friend’s constituency, complete with wellington boots, and I know that she takes an enormous interest in such matters. It is important to understand that these changes will in no way affect building regulations or the necessity to ensure flood prevention and to take sensible precautions.

[Andrew Bingham (High Peak) (Con)]

I appreciate the fact that the Secretary of State has come to the Chamber today and said that he is prepared to listen, as many of us have concerns. Like other Members, I want to know what is in his mind and what he is thinking. At this stage, I merely urge him to pick up on an adage used elsewhere: it is not all about size.

[Mr Pickles]

I am always glad to hear that it is not all about size; that is a comfort to me.

[Mr Charles Walker]

I thank my right hon. Friend for being most generous in giving way. In deciding what will happen next week, will he discuss his position and that of others with colleagues on the Back Benches so that we can reach consensus on what might be acceptable?

[Mr Pickles]

Absolutely. My hon. Friend the Planning Minister and my right hon. Friend the Minister—[Interruption.] The Minister from Bath, whose responsibilities are numerous. My hon. Friend and my right hon. Friend have already entered into extensive discussions and I believe, based on those discussions, that the problem is bridgeable.

14:15

[Peter Luff (Mid Worcestershire) (Con)]

I think that the Secretary of State will recognise that the level of attendance in the House today for the consideration of Lords amendments shows how seriously many of us take the matter. To return to his earlier metaphor, he is a good egg and I am prepared to give him the benefit of the doubt. He must not scramble the process, however, and I hope that he will return with substantive changes. Tinkering is not enough; we believe that the policy is seriously flawed.

[Mr Pickles]

I am grateful to my hon. Friend for not coddling me.

[Lyn Brown]

I am genuinely grateful to the Secretary of State for giving way, but had I heard his words from a Minister on my own side when I sat on the Government Benches, I would have thought that they were wriggle words—I would not have been persuaded. Will his ideas about what might be changed address concerns in my constituency about beds in sheds?

[Mr Pickles]

I cannot imagine any circumstances in which permitted development rights would allow beds in sheds. I politely remind the hon. Lady that this Government took decisive action on beds in sheds after years of neglect from Labour.

[Mr Kevan Jones (North Durham) (Lab)]

I am really enjoying the Secretary of State’s performance this afternoon. I must say that the thought of consensus and the right hon. Gentleman does not spring to mind on many occasions. Will he put us, and particularly his Back Benchers, out of our misery and suggest what the great consensual position might be next week?

[Mr Pickles]

The solutions are available and my Back Benchers have come up with a number of ideas. It would be wholly wrong of me not to place on record my gratitude to the hon. Gentleman for his sterling work in exposing the waste under the previous Labour Government through a series of questions. We on this side are very grateful for all he has done and I certainly intend to put him up for a campaigning award.

[Mrs Anne Main (St Albans) (Con)]

I came to the Chamber in the hope that the Secretary of State would give me some assurances that something dramatic would happen. I am not happy, however, about it being debated behind the scenes and not on the Floor of the House. The concerns of Members on both sides of the House are genuine and we feel these pressures intensely when we talk to our local councils.

[Mr Pickles]

As consensus goes, this is pretty damn dramatic. It is about as dramatic as consensus gets. I will certainly do my best to make my hon. Friend—and, more importantly, her constituents—happy and contented.

[Nadine Dorries (Mid Bedfordshire) (Con)]

I take on board the Secretary of State’s point that the LGA has not provided him with sufficient evidence, but will he accept as evidence the fact that many of us have been approached by our councils and their leaders, who have asked us to come along and support the amendment? The change is not one that councils want or one that they think that they can afford.

[Mr Pickles]

It has been noticeable that discussion in the Chamber is one-sided today. There is concern on the Government Benches and either complete indifference or partisan points from those on the Opposition Benches.

[Several hon. Members]

rose—

[Mr Pickles]

I shall give way to my hon. Friend the Member for Mid Dorset and North Poole (Annette Brooke), but then I think that that must be it as others need to speak.

[Annette Brooke (Mid Dorset and North Poole) (LD)]

I, too, would like more details about the direction of change. As most councils have extensive delegation powers, 90% of extensions go through smoothly. Why is this such a huge measure for those that need more detailed consideration for the sake of the neighbours and the whole neighbourhood?

[Mr Pickles]

I could not have put it better myself. I believe we can move together, arrive at a broad consensus and ensure that homeowners can see developments take place and that planning officers are not bogged down with unnecessary considerations. I welcome the important scrutiny of the Bill in the other place and the majority of the amendments proposed. In the light of the new commitment to reflect, I hope I have convinced the House that amendment 7 is unnecessary and that it should therefore not be accepted today.

[Hilary Benn (Leeds Central) (Lab)]

I welcome the Government’s decision to accept all but one of the amendments that were passed in the other place, in particular the sunset clause on section 106, the Secretary of State’s announcement today on the assessment of viability, the fact that at least some criteria will now be published for identifying so-called failing planning authorities, and the right hon. Gentleman’s agreement that when it comes to broadband development, the Secretary of State should have regard to the environment and the conservation of the natural beauty of our countryside.

That leaves the House with the one amendment on permitted development rights, and the very large attendance here today demonstrates the extent of concern. I listened extremely carefully to what the Secretary of State said. There have been many references to eggs in the course of the debate so far. One Member said that the Secretary of State was a good egg, but this particular egg is completely empty when it comes to the detailed proposal that he has in mind. What he said was not persuasive, not just to those on the Opposition Benches but I suspect to those on the Government Back Benches.

This is, in essence, a debate about how decisions should be taken on extensions to residential properties. It is a debate about, first, the process, and secondly, who should take those decisions. At the heart of the debate is a simple question: is it sensible for the Government to impose the change in permitted development rights on every single local planning authority in England? That is what we are debating. The Secretary of State tries to suggest that the proposal is about empowering people, but what he is trying to do is to take away the rights of neighbours to object to developments that they think will affect their rights and their amenity. That is why there is so much concern.

I think it is a centralist proposal that the right hon. Gentleman has advanced. I do not think that it will give the boost to the economy that is being claimed, because I do not think the back gardens of England should be made the victims of the failure of the Government’s economic policy.

[Mrs Main]

May I ask the right hon. Gentleman to consider his phraseology? The issue is not necessarily the back gardens of England, but the curtilages of England, which could be a different point entirely.

[Hilary Benn]

The hon. Lady makes an extremely important point. I was going to raise it in a moment, but I shall raise it now. The Planning Minister told the Select Committee that the development would be limited to 50% of the garden, but the consultation document does not say that. It says 50% of the curtilage of the house. As the Royal Town Planning Institute has pointed out, the two are self-evidently not the same. I would happily give way at this moment to the Secretary of State if he could clarify a simple question. Is it 50% of the garden or 50% of the curtilage?

[Robert Neill]

Will the right hon. Gentleman give way?

[Hilary Benn]

Gladly, but the House will have noticed that the Secretary of State, who is responsible for this, cannot answer or is unwilling to answer a very simple question in the House today.

[Robert Neill]

Will the right hon. Gentleman answer this very simple question? Given his new-found concern for back gardens, will he explain why his Government persisted in regarding back gardens as brownfield development, resisted attempts to reclassify them and permitted more building on back gardens, which was reversed by this Government?

[Hilary Benn]

I make no apology for having a brownfield-first policy when we were in government. One of the reasons why more and more development is going to be seen on greenfield sites is that in revising the national planning policy framework, the Government have weakened the extremely sensible brownfield-first policy.

There was a hurried consultation on permitted development rights. Reference has already been made to the fact that although the consultation closed on 24 December last, anyone who looked this morning on the Communities and Local Government website to remind themselves of what the Government’s response was, given the great hoo-hah that there has been and the many views expressed, would have found this simple statement:

“We are analysing your responses. Visit this page again soon to download the outcome to this public feedback.”

I find it extraordinary. Given the extent of the concern and the discussions that have been taking place at the last minute with colleagues on the Government Benches who are immensely concerned about the matter, how is it that all these months after the closing date for the consultation, the Government have not even been able to publish what people said and to respond to it?

I am not surprised that the Government have not been keen to do that because of the extent of the concern expressed. Two arguments have been made. The first was that the Government’s proposal would boost economic recovery. That view is not shared by those who should know. When the Planning Minister was asked by the BBC what would be the economic impact of the measure, he replied, “I don’t know.” The truth is that nobody knows. The Select Committee was not persuaded by the economic argument. It said that the case that the Government had put was

“so tentative, broad-brush and qualified as to provide little assurance that the financial benefits suggested will be achieved.”

Even Anglian Home Improvements, who know a lot about building conservatories, said that the proposals would on their own

“achieve little if anything in terms of securing economic growth”.

If the Government wanted to boost the construction sector and the building of conservatories, they could do a lot worse than to reduce the rate of VAT on home improvements to 5%, as the National Federation of Builders has suggested.

The second argument and the substantive one is that it should be made much easier for people to be able to extend their homes. The Secretary of State knows, as we have heard in this debate, that about 90% of those planning applications for extensions beyond the existing permitted development rights are approved. That shows that the planning system is working to allow these extensions, but what it also shows is that the planning system works to weed out the 10% of applications that are not acceptable. The right hon. Gentleman wants those 10% to be able to go ahead, come what may. That is the consequence of what he is proposing.

[Bob Blackman]

It is interesting that the right hon. Gentleman is referring to a key point in the debate—the 13% of applications that are currently not approved. Can we be clear about the Labour party’s policy on permitted development? Is it in favour of a free-for-all or in favour of vast restrictions?

[Hilary Benn]

I shall be very clear. The reason I shall be going through the Lobby to vote against the Secretary of State’s motion today is that I believe that decision should be taken by local communities and local authorities, as the other place suggested. Instead of being decided from the centre, it should be decided locally.

That is the reason why, for example, Richmond council called them “very foolish proposals”, and why the leader of Sutton council said that the Government’s proposals were

“a recipe for disaster....If this is allowed to happen it will set neighbour against neighbour and split communities”.

It is why the leader of Bromley council spoke about

“an uncontrolled planning free for all, causing major problems for future generations”

which would

“undermine the rights of our residents to voice their views on what will affect their immediate surroundings”.

And it is why Councillor Mike Jones, who leads on the Local Government Association in this field, said:

“All this policy will do is give a green light to the unsightly and out-of-place small scale developments which have already been turned down because of legitimate local reasons.”

The right hon. Gentleman made an argument about article 4. It is an argument that the Planning Minister made when he appeared before the Select Committee back in October, although as we have heard, article 4 is designed to deal with particular problems in particular places. The right hon. Gentleman said he could not find any examples of people who had been able to claim compensation against their councils, although a fair point was made that councils are reluctant to find themselves in that position. It was rather strange, therefore, that back in September the Secretary of State went to great pains to say about councils that do use article 4:

“If they do that, then a member of the public can seek damages against them.”

That sort of suggests that he was saying, “Well, if you don’t like what your council is doing by using article 4, you can always try to get some compensation.”

14:29

Given the slight contradiction there appears to be, even on the Front Bench, between the Secretary of State and the Planning Minister, will the Secretary of State clarify when he winds up whether he would give consent in every case to applications from local authorities to use an article 4 direction to cover their whole area and exempt themselves from the permitted development rights? If he says no, it is not a remedy. If he says yes, he is making the other House’s case for it, because what it has proposed is a much simpler way of achieving the same effect: namely, giving the local authority the right to opt out of the permitted development right proposal in respect of residential dwellings.

I will keep my remarks brief, because many Members wish to contribute. I simply say to the Secretary of State that it is quite clear that his proposals have not been thought through. We know that they will not achieve the boost to the economy he suggested they would. They have engendered an enormous amount of concern and opposition from Members of the House, organisations, local authorities and others.

I listened extremely carefully to what the Secretary of State chose to describe as his “honeyed” words. To be honest, I was expecting something much more significant. In truth, there was nothing there. He has had all this time, since the consultation closed, and he has been well aware for months of the concern that the proposals have created among many of his right hon. and hon. Friends. With great respect, it is not good enough for him to come along today and say, “Okay, I get the message. Honestly, I am sure that we can work this out. Believe me.”

We have a simple choice today: we have the Lords amendment, which simply states that if a local council does not want to do this, it does not have to; and we have whatever might appear in the other place next week—I cannot say what that is, and neither can any other Member, because the Secretary of State has not shared with us his thinking on that. On that basis, I urge all Members to accept what the other place has proposed and solve the matter once and for all by rejecting the Secretary of State’s motion and giving local councils the power to take these decisions for themselves, because that would be the localist thing to do.

[Robert Neill]

As a former sous-chef in the Department, I have no doubt that if my right hon. Friend the Secretary of State says he wishes to achieve a workable and viable compromise, he means it. I trust him and believe him because I know him, and I hope all my hon. Friends think the same.

Very little weight can be attached to the Opposition’s cynical approach. Having spent nearly two and a half years as a ministerial sous-chef stripping away the centralised control that the Labour party placed upon planners in this country and the constraints it placed on local authorities, I think that it ill behoves Labour Members to talk the language of localism.

[Lyn Brown]

Will the hon. Gentleman give way on that point?

[Robert Neill]

I will make some progress before giving way.

It is well known that throughout the history of planning legislation in this country there has been a concept of permitted development. That is not new; it goes back to 1947. It has always been accepted that it is legitimate, for reasons of public policy, from time to time to adjust the criteria that determine what constitutes permitted development, and that has always been done at national level. The difficulty with the Lords amendment is that it would allow a complete opting-out of any adjustment to national policy at a local level, and that seems to me to be nothing other than a needlessly blunt instrument. However, I accept that there is an issue about the operation of article 4 in practice. I know that from my own dealings with local authorities and from my own experience as both a Minister and a councillor.

[Lyn Brown]

The hon. Gentleman is very kind. I was going to ask him whether he thought that the policy was consistent with the Government’s localism agenda. I think he would agree with me that it is not. Does he agree with me that Newham council has an issue with developments on back gardens that are used as dwellings but are uninhabitable, unsanitary and completely against cohesive communities?

[Robert Neill]

There is a real issue in Newham and other parts of the country about developments in back gardens. When I was in the Department, it was my right hon. Friend the Member for Welwyn Hatfield (Grant Shapps), then the Housing Minister, who did more to tackle the issue than any Minister before him, and that is now being carried on by my hon. Friend the Member for Grantham and Stamford (Nick Boles). This Government are helping to deal with the issue the hon. Lady raises on behalf of her constituents.

I accept that my right hon. Friend the Secretary of State, with his experience of the matter, understands that we need to find an article 4 system that actually works, rather than the well-intentioned but draconian outcome proposed by their lordships. Rightly or wrongly, concerns have been raised about how article 4 actually operates on the ground. That relates in part to the point my hon. Friend the Member for Birmingham, Yardley (John Hemming) made about a degree of risk averseness among local government officers in recommending them to their members.

[Mr Stewart Jackson]

Does my hon. Friend not agree with me, however, that it would have been easier to persuade the House of the merits of these proposals if the indicative costs of, say, the enforcement action likely under the new regime, and indeed the indicative economic benefit referred to by the Secretary of State, had been made more explicit in the course of the debate?

[Robert Neill]

My hon. Friend raises an important point, and I accept the basis on which he does so. Equally, however, there is no doubt a great deal set out in the consultation. I very much hope that the consultation contains some constructive proposals on how we might make an article 4 system work more effectively in practice. I understand his point, but the details are particularly indicative and speculative in these cases because, in general, the Government have rightly taken a policy of not seeking to intervene in local authority applications for article 4 directions, which is a genuinely localist stance. We have in fact made the position more localist by requiring only notification of the article 4 direction, rather than approval by the Secretary of State—a general move back towards localism, which the previous Government never did. That is why I think that, rather than thinking about the indicative costs, we should look at finding a constructive means whereby local authorities have the confidence to use article 4 directions, knowing that they will work and will not create a disproportionate burden.

[Bob Blackman]

My hon. Friend has vast experience in local government and in planning law. Does he agree that one of the reasons for the impetus behind the campaign to allow local authorities to opt out is the Government’s proposal to double the amount of permitted development that will be allowed? In some parts of the country it will work, but in others it will not. That is the concern of local authorities, MPs and councillors.

[Robert Neill]

I understand my hon. Friend’s genuine concerns—I do not doubt the good faith with which they are raised—but, equally, I hope he accepts that my problem with the Lords amendment is that it would import a blanket approach to something that has always been adjusted nationally, although however much it should or should not be is a matter for debate. If we are going to change that, we ought to give it rather more consideration.

My other difficulty with the Lords amendment is that it would make a very significant shift in policy by adopting that blanket opt-out approach, without any consideration of that in the consultation. I hope that my right hon. Friend the Secretary of State’s stance will enable that to take place.

[Mr Betts]

The Select Committee looked at the Government’s proposals and we concluded that the case for the change to permitted development rights for domestic extensions has not been made. The Government’s impact assessment estimates costs of between £5 million and £100 million, which shows the lack of clarity in their thinking. The impact assessment made no estimate of the social and environmental impacts. Reference has been made to the 90% of proposals that currently gain planning permission, but of those some are changed because of representations on the consultation arrangements that are made as part of the planning consideration. We should be concerned not only about the 10% that are turned down but would be accepted under permitted development rights, but those that are never submitted for planning permission because they are so awful that people know they would be turned down if they were submitted.

On localist issues, what can be more local than an extension to a house? This has no national significance. The Planning Minister has accepted that it will not have any significant impact on economic growth in the country as a whole—it is a local matter. In that case, why not accept amendment 7? The Secretary of State has argued for the use of article 4 instead. Article 4 is time consuming, cumbersome, subject to challenge and potentially costly. It is really meant to be used as an exception rather than as a general rule. The Secretary of State must clarify whether article 4 will achieve the same effect for local authorities as amendment 7, and, if not, what is the difference between them. If the same effect can be achieved under article 4 as under amendment 7, then why not retain amendment 7?

[Andrew Bingham]

I am not keen on this idea, and I have said so from an early stage, because there would be long-term consequences from what is perceived as a short-term gain. We have heard about monstrous carbuncles; I think that we could end up with a lot of small warts on properties. My constituency of High Peak is a hilly area. A small extension to a property next door but one on a steep hill can have an overbearing effect on the neighbours. To do this without planning permission would be wrong for my constituency and wrong in general. The Lords amendment would give this power to local councils. I do not know what my local council would do with it, although I have a good idea; it may go with it or it may not. The amendment is very sensible. It would devolve the power to our local authorities—our locally elected members—to let them make the decision on whether they want to follow this approach. That is why I will support the Lords amendment and not, I am afraid, its rejection.

[Annette Brooke]

I, too, welcome the work done in the other place. We have some very sensible amendments and I am pleased that the Government have accepted them.

I have in my hand the representation that I submitted on 24 December, obviously having worked right up until Christmas. Nothing has really changed in the views that I expressed on behalf of colleagues at that time, when we rehearsed the arguments over and again. However, I would like to pick up on the long term effects mentioned by the hon. Member for High Peak (Andrew Bingham). The problem is not just that one extension might be a great eyesore and affect neighbours for a long period, but that even when the temporary measure had ended it would be very difficult to refuse an application from houses nearby, so a whole neighbourhood could be affected over time.

I would like my right hon. Friend the Secretary of State to say a little more about how he will tackle the issues that we have before us, on which we have had a consultation. They are not satisfactory as they are, and we are in the dark about where we might go next.

[Zac Goldsmith]

Many colleagues are minded to support the amendment but would like to support the Government. For my part, I would need to hear the Secretary of State say, first, that whatever amendment the Government introduce in the Lords will reflect absolutely the spirit of this amendment; secondly, that we will have time in this Chamber to debate that amendment; and, thirdly, that he is laying out a clear timetable. Without those assurances, I personally, regretfully, will be unable to support the Government and will see myself marching through the contrary Lobby.

[Mr Stewart Jackson]

In this of all weeks, it pains me to be considering voting for the amendment and against the Government, but this policy has not been well thought out. When the Planning Minister came to speak at the meeting yesterday, he was very gracious but unable to demonstrate the economic benefits. We know that the Secretary of State is between Scylla and Charybdis on this because it is a Treasury-driven issue, and he has played a difficult wicket very well. We have seldom had a situation where so many Conservative councils and other bodies have united to say that legislation is very bad This measures offends against the principle of localism. It is also a credibility issue for this House. It is not absolutely the best thing in the world to be told the Government’s position an hour ago by The Daily Telegraph while the Secretary of State assures us in this House that he is thinking about clarifying the situation.

I am not convinced that densely populated urban areas such as mine will not suffer from the problems raised by the hon. Member for West Ham (Lyn Brown), such as beds in sheds. We need to take this issue away to demonstrate the costs of enforcement actions in the new regime and the economic benefits. I look to the Secretary of State to reassure the House, but at the moment I am minded, very regretfully, to support the amendment.

14:45

[Mrs Main]

Regrettably, the only reason this proposal would have any economic benefit is that the scale of such developments would be so large that people would scramble to go and get the thing built before anybody could object to it. I am very unhappy about it. In 2005 we had the high hedges legislation, whereby anything over 2 metres was considered un-neighbourly, and now we are hearing proposals for something that is 4 metres high by 8 metres. This will potentially be extremely divisive in communities. I really feel that the Secretary of State could have offered us a little more today, although I know that he is in a very difficult place in this regard. I believe that in areas such as St Albans, particularly when we have no definitions of curtilage or gardens, this will be a very divisive and ruinous issue.

[Mr Pickles]

I think that I can offer the reassurances that colleagues are seeking. It is not a question of simply taking my word for it, regarding me as a good egg, or whatever. The simple truth is that this proposal has got to come back here to be discussed and voted on. I need the help and assistance of colleagues to ensure that the proposal is voted down. If we do not vote it down, we cannot arrive at a consensus. This would be a wholly unusual and strange process. It would take a sledgehammer to planning system, and that is wholly wrong. I believe that we can give the assurances that my hon. Friends seek, but we need some time to discuss this with right hon. and hon. Members, and then, whatever the outcome, it will come back here on 23 April; that is certain. I ask my hon. Friends to look most carefully at this issue, to support the Government, and, by so doing, to support the rights of property owners and local authorities.

[Bob Blackman]

There are two key concerns here: first, the rights of local authorities; and secondly—

14:47

Two hours having elapsed since the commencement of proceedings on Lords amendments, the debate was interrupted (Programme Order, this day).

The Deputy Speaker put forthwith the Question already proposed from the Chair (Standing Order No. 83F), That this House disagrees with Lords amendment 7.

14:48

Division 203

Ayes: 286

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Conservative: 247
Liberal Democrat: 38

Noes: 259

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Labour: 223
Conservative: 17
Liberal Democrat: 10
Democratic Unionist Party: 3
Plaid Cymru: 3
Social Democratic & Labour Party: 2
Independent: 1
Alliance: 1
Green Party: 1

Lords amendment 7 disagreed to.

The Deputy Speaker then put forthwith the Questions necessary for the disposal of the business to be concluded at that time (Standing Order No. 83F).

Lords amendments 1 to 6, 8 to 24 and 26 to 40 agreed to.

Motion made, and Question put forthwith (Standing Order No. 83H), That a Committee be appointed to draw up Reasons to be assigned to the Lords for disagreeing to their amendments 25 and 7;

That Roberta Blackman-Woods, Karen Bradley, Nic Dakin, Michael Fallon and Andrew Stunell be members of the Committee;

That Michael Fallon be the Chair of the Committee;

That three be the quorum of the Committee.

That the Committee do withdraw immediately.—(Karen Bradley.)

Question agreed to.

Committee to withdraw immediately; reasons to be reported and communicated to the Lords.

Enterprise and Regulatory Reform Bill (Programme) (No. 3)

Motion made, and Question put forthwith (Standing Order No. 83A(7)),

That the following provisions shall apply to the Enterprise and Regulatory Reform Bill for the purpose of supplementing the Orders of 11 June and 16 October 2012 (Enterprise and Regulatory Reform Bill (Programme) and Enterprise and Regulatory Reform Bill (Programme) (No. 2)):

Consideration of Lords Amendments

1. Proceedings on consideration of Lords Amendments shall (so far as not previously concluded) be brought to a conclusion two hours after their commencement at today’s sitting.

2. The Lords Amendments shall be considered in the following order, namely Lords Amendments Nos. 35 to 40, remaining Lords Amendments.

Subsequent stages

3. Any further Message from the Lords may be considered forthwith without any Question being put.

4. The proceedings on any further Message from the Lords shall (so far as not previously concluded) be brought to a conclusion one hour after their commencement.—(Mr Randall.)

15:03

Division 204

Ayes: 313

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Conservative: 263
Liberal Democrat: 48
Independent: 1

Noes: 245

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Labour: 228
Democratic Unionist Party: 5
Scottish National Party: 5
Plaid Cymru: 3
Social Democratic & Labour Party: 2
Independent: 1
Alliance: 1
Green Party: 1