Growth and Infrastructure Bill

Robin Walker Excerpts

Monday 5th November 2012 Commons Chamber

[Mark Pawsey (Rugby) (Con)]

I am pleased to follow the hon. Member for Easington (Grahame M. Morris). One thing that he and I can agree on is the need to get our economy growing again. The recent growth statistics are, of course, encouraging, but there is plenty more to do. I welcome the Prime Minister’s direction to Cabinet Ministers, which he made in the early part of the parliamentary year, to prioritise growth. Our debate today focuses on the contribution to growth made by the Department for Communities and Local Government.

The Department made a great start with the national planning policy framework, bringing communities into the planning system through neighbourhood planning. I am delighted that in my constituency we have a frontrunner in the neighbourhood planning process. It is supported by a progressive local authority with a stronger bias towards growth, and by planners from Planning Aid. There are key ways we can get growth in our economy, and they include the development of housing and development within the built environment more generally.

I am conscious of the words of the previous Minister with responsibility for housing, who reminded us that for every 100,000 homes built, 1% is added to GDP. Supporting the private sector, in particular small businesses, is important. I am glad that since 2010, 1 million new private sector jobs have been created to rebalance the economy, but we need to do more to help small businesses. The Forum of Private Business points out that small businesses contribute 24.9% of the UK’s wealth—a quarter—and we must do all we can to encourage them to flourish.

I would like to speak on some of the proposals in the Bill, specifically those regarding section 106 agreements, speeding up the planning process and powers to the Secretary of State. I will then conclude with one or two remarks concerning omissions and missed opportunities. On section 106 agreements, it is unfortunate that the provision is necessary, but clearly agreements made five years ago at the height of a housing boom, at the height of the market, are often too onerous for a site to come forward for development. However, I have some concerns about the measures in the Bill.

Like hon. Members from all parts of the House, I support mixed communities. Section 106 agreements have enabled mixed communities to be built, and we are no longer developing large estates of one housing type. We now have mixed housing and that provides social interaction between residents, and communities work at their best when there is a mix of people. To listen to Opposition Members, however, it almost sounds as though they expect that every single section 106 agreement would need to be renegotiated. Of course, that is not the case at all. I draw the attention of hon. Members to a development that has just started in my constituency, the Eden Park housing development site, where 1,300 new homes are earmarked to be built. The infrastructure has just gone in and building has started. The site has a long-standing section 106 agreement to provide 40% affordable housing. That has not prevented the site from being developed, and nor should the requirement, or the opportunity, to renegotiate the section 106 agreement prevent future affordable housing development.

Will the Minister clarify when the power for local authorities to renegotiate will be introduced? Will there be a requirement on local authorities to renegotiate? As Members from all parts of the House have said, section 106 agreements are already regularly negotiated. They are a contract between the local planning authority and the developer. As with any form of contract, the terms can be varied by mutual agreement, but will there be any requirement for local planning authorities to renegotiate? What has stopped negotiation taking place up until now? Have some councils been unwilling to negotiate with developers, or have developers been put off approaching the local planning authority? I would like the Minister’s reassurance that, when a developer comes forward with a request to renegotiate a section 106 agreement, there will be an evidence base when making a determination. We heard about the issue of developers coming forward looking for a better deal. One concern I have is that that opportunity to come forward for a better deal may prevent some developers from going ahead with an existing section 106 agreement that is eminently deliverable.

Hon. Members have spoken about the Bill’s impact on speed. It is clearly important to speed up the system, but we must not forget that swifter planning is not necessarily the be-all and end-all. At times, we have to ask ourselves what is more important—good planning or fast planning. Speed is not everything and there are dangers that very quick decisions on planning may lead to bad development, and bad development will last for many generations.

It is the people with homes in areas where bad planning has taken place who have to live with the consequences. If we get development wrong, it helps nobody: it does not help the residents and it will not help the taxpayer, because years down the line poor development will need rebuilding. The Communities and Local Government Committee went to Manchester and saw the redevelopment of a site that itself was redeveloped in the 1970s, when tower blocks had replaced more conventional housing. It was not successful, however, and they were demolished and replaced with more conventional housing.

People’s attitudes towards development are influenced by the quality of previous developments. That is a further reason for getting the planning decisions right, rather than necessarily speedily. If we want people to respond positively to development, they need to be able to picture good development, rather than bad development. Too often, when development proposals come forward, people picture bad development, which leads to an instinctive reaction to oppose, rather than support.

[Mr Robin Walker (Worcester) (Con)]

I agree with my hon. Friend about the importance of good development. Does he also agree that local ownership of development is vital, and would he join me therefore in urging the Government to lay to rest the last ghostly vestiges of the previous Government’s terrible regional spatial strategies?

[Mark Pawsey]

Absolutely. My hon. Friend will have heard my remarks about localism and neighbourhood planning. By engaging people in the planning system and letting them have a say, we will get a much more positive attitude towards development.

Members across the House have drawn attention to the danger of the Secretary of State’s planning permission powers conflicting with the Government’s localism agenda. I hope again that he will not need to use these powers regularly. Businesses, developers and applicants know which local authorities are the poor performers. Many developers have some great schemes but choose not to bring them forward because they are concerned about a particular council’s approach. They would rather put in their applications where they are more likely to get a positive response from the local authority. I draw the House’s attention to my local authority, Rugby borough council, which is a progressive council with a strong approach to development.

On an idea that is not in the Bill, I ask the Minister to turn his attention to the thoughts of the Royal Town Planning Institute. Could designation be used positively? If we are to penalise badly performing local planning authorities by taking powers away from them and giving them to the Secretary of State, could the converse not apply, whereby authorities that perform consistently well, such as my authority in Rugby, have the incentive of additional powers being granted to them? My local authority could achieve even greater things with additional powers. Rugby council knows what it can do. I look forward to hearing the Minister’s views on that.

Clause 22 deals with business rates. From my experience of running a business, I know that business rates are the third biggest bill facing businesses. I heard with interest the Secretary of State’s remarks about the multiplier and how the take from business rates nationally will need to be the same, whether or not a revaluation takes place. I just wonder, however, whether we might be better off sticking with the five-yearly review. How will businesses in my constituency benefit from putting off the revaluation till later rather than sooner?

The Bill does not address one aspect of the development process where value could be added. It concerns the statutory consultees and their power within the planning process. In recent months, I have been struck by the power that these bodies have in the planning application process. The Government’s own statutory paper on consultees in July named 23 bodies, including British Waterways, the Forestry Commission and the Highways Agency, that are consultees to the planning system and the views of which have to be sought before applications can be granted. I referred to a great success story in my constituency—a site for 1,300 homes—but another site for 6,000 is currently being held up not because of issues of the affordable housing criteria but because of the delays in getting in all the responses from the statutory consultees. This is red tape that could be cut. I would very much like to hear the Minister’s views on limiting the time that consultees have to respond. If a statutory consultee does not get his views in within a certain time frame, perhaps those views should carry less or even no weight. This is an area in which I would like to see powers restricted.

The second rates issue that is not addressed by the Bill is empty property rates. My hon. Friend the Member for Bromley and Chislehurst (Robert Neill) reminded us of the reliefs, but I am concerned that the issue of empty property rates is leading to a shortage of accommodation for our businesses. I started a business 30 years ago in very low-cost accommodation, which was surplus to the requirements of a large employer in my constituency. I would not be able to do that today because that building would have been demolished in order to avoid paying business rates on the empty building. Later in the life of my business, when we were doing well enough to move to larger premises, we moved to an industrial unit that had been built speculatively by a developer. That would not have been built today either, because nobody is building speculative industrial units for fear of them lying empty and attracting business rates. A concession on the part of the Treasury—I realise that it is a Treasury matter—in respect of empty property business rates would go some way to providing an incentive.

I support the vast majority of measures in the Bill and I look forward to the Minister’s response to the points that I have raised.

--- Later in debate ---

[Peter Aldous]

My hon. Friend and fellow Suffolk MP makes an extremely useful point. I was not going to cover it tonight, but the whole business rates approach to how we value business properties needs review. It is a dynamic, ever-changing world and, with the rise of the internet, property is less important in business generally. We need a fundamental review.

[Mr Robin Walker]

I support my hon. Friend’s contention that we need a fundamental review of the business rates revaluation system. Does he agree that the long backlog of outstanding cases with the VOA and the long delays in answering a number of appeals is another reason to look at this whole area?

[Peter Aldous]

I thank my hon. Friend for that intervention, with which I agree entirely. I will come on to that issue later and believe that it is placing a major burden on businesses. We need action not at another time and another place, but now. If we delay until 2017, changes in values will be far greater and create bigger swings in liabilities, which will be far more difficult for businesses to cope with.

This leads me on to the fact that any property tax requires frequent and regular revaluations to ensure its acceptability and fairness. The five-yearly reviews that have been in place for more than 20 years are well understood and provide a degree of certainty. A break in that precedent creates uncertainty. In future, people and businesses will not know for sure when or whether a review will take place. The reason for having regular reviews of the rating list is that property values, in relative terms, change over time. Rents in some sectors and in some locations will rise, while those in others will fall. It is important that the rating system has an in-built review structure that reflects the dynamic and ever-changing nature of the property marketplace. In this way we can be sure that the tax burden is spread fairly so that those with the broadest shoulders pay the most and those in more challenging locations and properties pay less. Liz Peace, chief executive of the British Property Federation, sums up the position well:

“A revaluation should shift the burden from those who are suffering to those who are prospering.”

There is a worry that the proposed freeze means that those in more lucrative locations will benefit and those in hard-hit areas will suffer.

I am particularly concerned about the possible effect of the postponement on the retail sector and on town centres. The Government have done a lot of good work in highlighting the problems faced by the high street and, working with Mary Portas, they are putting in place measures to tackle these challenges. Lowestoft in my constituency is a Portas pilot town, and the town team are setting about their work with relish and enthusiasm. It is important that those of us in this place provide the framework through which such work in towns across the country can come to fruition. I fear that the proposed postponement might undo this good work. In Lowestoft, prime rents fell by 40% between 2008 and 2012. It is important that rates are realistic and up to date so as to attract investment back into the town centre.

The retail sector pays a significant proportion of all business rates—more than a quarter, at 28%. On average, 14.6% of retail units across the country are vacant. This is due to a variety of reasons, one of which is high rates. Mary Portas has said that high rates are a deterrent to investment in town centres. It needs to be remembered that the retail sector is the UK’s biggest private sector employer, providing crucial jobs to 1 million people in the 16-to-24 age group. There is great concern that another hike in rates will lead to fewer chances of jobs, result in less investment in the fabric of our town centres, and create a more troubled high street.

Finally, I turn to the backlog of rates appeals, which are placing a brake on private sector investment and are a significant strain on the finances of businesses. It is estimated that there are 241,710 appeals outstanding against the 2010 list, and this equates to £1.8 billion owed to business. The number of appeals being carried out at the end of the second year of the 2010 list is 74% higher compared with the same point in the 2005 list. Improved systems and processes must be put in place to clear the backlog and to ensure that the problem does not recur. An uncalled-for and significant burden is being placed on businesses in difficult times, and it must be removed with full haste. Businesses must not shoulder unnecessary burdens as a result of these bureaucratic hold-ups within public bodies.

I support the direction of travel of the Bill and I shall vote for it this evening. However, the proposal to postpone the rates review requires further scrutiny to ensure that it does not have unintended consequences for, and a negative impact on, many businesses across the country. The evidence on which the proposal has been made should be published and scrutinised as soon as possible, and it needs to be very carefully considered in Committee.