At the pre-Budget report 2005, the Government published a consultation document setting out their proposals for a planning gain supplement, which was designed to capture a proportion of the increase in land value that arises when planning permission is granted. The proposed planning gain supplement, which would not be introduced before 2008, would apply to all types of development, including retail.
Although I welcome the proposals, big developers will be able to use the planning system until 2008 to maximise their profits without putting anything back into local communities. Tesco obtained planning permission for a huge superstore in the northern part of my constituency, but has put nothing back into the local community by way of planning gain and has forced several small retailers out of business. What steps does my hon. Friend propose to take to ensure that that situation is not repeated in other areas?
I am grateful to my hon. Friend for his courtesy in informing me of the subject. I have indeed looked into the proposed store in Hamilton. As well as introducing the planning gain supplement in 2008—the Government will be responding to the consultation on that in due course—we will shortly be issuing guidance on good practice to try to improve the way in which negotiations take place under the existing system and thus create more consistency across local authorities.
The hon. Member for Leicester, East (Keith Vaz) has set the framework for me. The Minister will be well aware that major retail developments often create difficulties for local communities because they lose their diversity of shopping and sometimes jobs as well, not to mention experiencing problems due to congestion. Will he undertake to talk to the Chancellor to ensure that when the planning gain supplement comes along, the money will not simply fill the Treasury’s pockets, but will be sent back directly to local authorities so that they can spend it on saving their communities from the congestion and economic and environmental damage with which such major developments leave them?
The hon. Gentleman makes a fair point and, indeed, I can give him such an assurance. There was a joint consultation between my Department and the Treasury—indeed, Revenue and Customs. We intend that the bulk of the money should be beneficial—[Interruption.] Let me just clarify the situation before the cynics in the Chamber get too suspicious. The bulk of the money will go to the local authority concerned. The intention in the consultation—we are yet to respond to it—is that there will be a top slice to allow infrastructure investment that does not fall specifically in the local authority area that is directly involved, but from which it will benefit. However, the bulk of the money will go to the council, as the hon. Gentleman suggests.
I am grateful for the opportunity to do exactly that. Under existing practice involving section 106, more than 79 per cent. of all retail developments make no contribution through planning obligations. Again, with the proviso that the consultation response is yet to be published, the proposal in the consultation is that the planning gain supplement should be universal to all types of development, including those of one or more dwellings.
The Minister can propose whatever adjustments he likes to the process for delivering infrastructure through taxation and paying for it that way, but even he cannot invent the basic raw material that is needed for some parts of our infrastructure if it does not already exist. Why should the public have any confidence in the planning and decision-making processes of the Government if it they cannot find out the adequate water supply that is needed to sustain their development programme in the south-east of England? Is it not the case, to paraphrase the old Sunday school song, that the wise Minister builds his house not only upon the rock, but one with an adequate water table, given that the rains no longer come a-tumbling down as they did?
We hear yet again a perpetuation of a myth. The last time that I looked into this matter it was people who used water, not bricks and mortar. Housing improvements and increases in housing numbers are driven not by population increases but by changes in demography—more single people, people living longer and changes in family life. That is why the accusation made by the hon. Gentleman and by others on the Opposition Benches is based on a false premise. Independent studies have shown that the amount of extra water required for the additional homes will account for an increase in demand of less than 1 per cent., and its supply is not related to the point that the hon. Gentleman is making.