John Redwood

|

Government proposals to introduce a new tax on land development

Yesterday in the House of Commons, John Redwood argued against the government’s proposals to introduce a new tax on the development of land.

Transcript from Hansard:

Mr. Redwood: The Government’s proposal needs to be checked and I support my hon. Friend the Member for Rayleigh (Mr. Francois) in suggesting that there is a need for much more study and consideration in Scotland before it could possibly progress. I wish to talk about the effects mentioned in his new clause, which could be quite serious and difficult for Scotland. I was pleased that he drew attention to the evidence of the Scottish Property Federation, which clearly believes that, if the measure went through, it would reduce the supply of development and development land in Scotland at a time when people feel that there needs to be more housing built in Scotland and when the great cities of Edinburgh, Glasgow and elsewhere may need more development opportunities for additional office, commercial or retail space. It would be a great pity if the House allowed something to go through in preparation for a tax that would make that position worse rather than better.

We are invited by the Government to believe that there are a number of people in Scotland currently sitting on land that might be suitable for development or buildings in the big cities that might be suitable for extension or demolition and replacement with better and bigger buildings who are not currently bringing those development opportunities through to the market but who, if a tax were imposed, would suddenly say, “Oh good. I can now pay a tax on my development, so I must rush off to the local planning authority to put in my planning application.” I know that there are some very altruistic people in Scotland, but I think that that is just a little incredible.

Dr. Starkey: Does not the right hon. Gentleman accept that there are some similarities between Scotland and the rest of the United Kingdom? For example, the Select Committee was told that there was ample evidence of land that had not been brought forward for development because of a lack of infrastructure. Given that the PGS is meant to fund the infrastructure, it would be perfectly possible for it to lead to sites that are not being developed at present being developed.

Mr. Redwood: It is perfectly possible for developers and councils to get together and organise such developments through section 75 agreements in Scotland and section 106 agreements in England. I do not understand how introducing an additional tax into the system would make the situation better; it must make it worse.

Dr. Starkey: Will the right hon. Gentleman give way?

Mr. Redwood: If I can finish my point, I will of course give the hon. Lady a chance to rescue her rather bad argument.

A section 75 agreement in Scotland is the natural way to achieve such development. Let us say that the tax is set at 30 per cent., which is the figure that I have heard bandied about. If 70 per cent. of that went back to the local authority—that would be 21 per cent.—the deal might be much less good than one that was achieved after negotiating a section 75 agreement, under which every pound would go into a piece of infrastructure that would clearly facilitate the development.

Dr. Starkey: I simply draw the right hon. Gentleman’s attention to the fact that the evidence that I cited came from the south-east county leaders. I believe that they are dominated by councillors of his party. They are worried that there are sites in the south-east that cannot be unlocked simply through section 106. They are quite keen on the PGS because it would raise much more money.

Mr. Redwood: I do not happen to agree with them and I do not think that the tax would work like that.It would obviously reduce the flow of development proposals and development land, especially because I assume that my party would repeal it quite early on in the term of the next Conservative Government, which, I am pleased to say, looks rather closer in the light of recent opinion polls. That would mean that people naturally would wait until the unnecessary legislation had been repealed, after which they would reach a sensible agreement with the local authority whereby money would not be wasted, or leak out of the local area, under an especially cumbersome mechanism that the Government had invented.

A lot of Labour Back Benchers—I only wish that they were here today—are very worried about the proposals. I believe that the right hon. Member for Greenwich and Woolwich (Mr. Raynsford), who has a lot of experience in this area, is a strong critic of the proposal, and I think that his opinions are mirrored by many Scottish Members, just a few of whom are in the Chamber. They are worried for good reason; their local authorities tell them that the tax would reduce their opportunities to take section 75 money, in the case of Scottish authorities, or section 106 money, in the case of English authorities, and thus reduce their ability to direct and control the element of the gain that a developer was prepared to share through a sensibly negotiated agreement.

I hope that the Government will think again. Rather like my right hon. Friend the Member for Suffolk, Coastal (Mr. Gummer), I think that we are not only considering a Bill that has virtually nothing in it, but wasting our time doubly, given that I suspect that the Government will think again and realise that many of their Back Benchers are correct that the imposition of such a tax into a complex system that proceeds by agreement at present would be far from helpful, but unhelpful.

There is only one other possibility: the Government are being very Machiavellian and wish to hang out the spectre of a tax in the hope that that will get some of the people who have land with development potential to rush to their local authority before the tax is introduced so that they can pocket the gain before the taxman does. I understand how that might work, but I doubt that the Minister would be honest enough to say today that that is the Government’s wicked plan. After watching Ministers and hearing their conversations with their Back Benchers, I fear that the Government do not even have a wicked plan. On this occasion, they have blundered into something that Labour Governments always do. They realise from historical research—history is not the strong subject of this Administration—that all the previous efforts have gone wrong, so they have come up with the silly idea that if there were a lower rate of tax, it might somehow not be so damaging. Such a tax might not be quite as damaging, but all tax is damaging in this situation. I wish to spare the people of Scotland from the proposal, so I have pleasure in recommending new clause 1 to the House.