Consideration of Bill, as amended in the Public Bill Committee
New Clause 5
Purpose of planning
‘In Part 2 of the Planning and Compulsory Purchase Act 2004 insert—
“13A The Purpose of Planning
(1) The purpose of the planning system is to positively promote the long term spatial organisation of land in order to achieve sustainable development.
(2) In the Planning Act 2008, sustainable development means managing the use, development and protection of land and natural resources in a way, or at a rate, which enables people and communities to provide for their legitimate social, economic and cultural wellbeing while sustaining the potential of future generations to meet their own needs by respecting environmental limits.
(3) In achieving sustainable development, planning should—
(a) positively identify suitable land for development in line with the economic, social and environmental objectives so as to improve the quality of life, wellbeing and health of people and communities;
(b) contribute to sustainable economic development;
(c) protect and enhance the natural and historic environment and quality of existing communities and the countryside;
(d) ensure long term sustainable patterns of resource use;
(e) positively promote civic beauty through high quality and inclusive design; and
(f) ensure the planning system is open, transparent, participative and accountable.”.’.—(Roberta Blackman-Woods.)
Brought up, and read the First time.
With this it will be convenient to discuss the following:
New clause 6—Local powers to establish permitted development rights—
‘(1) Section 57 of the Town and Country Planning Act 1990 is amended as follows.
(2) In subsection (3) after second “order”, insert “issued by the local planning authority”.
(3) After subsection (3) insert—
“(3A) Where a local planning authority proposes to make an order under this section it shall first prepare—
(a) a draft of the order; and
(b) a statement of its reasons for making the order.
(3B) The statement of reasons shall contain—
(a) a description of the development which the order would permit; and
(b) a plan or statement identifying the land to which the order would relate.
(3C) Where a local planning authority has prepared a draft local development order, it shall consult, in accordance with regulations, persons whose interests it considers would be affected by the order.”.’.
New clause 7—Town and Country Planning Act 1990 pre-application case oversight—
‘Section 74 of the Town and Country Planning Act 1990 (Directions etc. as to method of dealing with applications) is amended by the addition of the following paragraph at the end of subsection (1).
“(g) for requiring the local planning authority, in relation to a proposed application for planning permission for development of a type prescribed by the order, to oversee (including by the giving of advice and opinions) the preparations and consultation being made and carried out by the applicant in relation to the proposed application, requiring the applicant and any other person specified by the order to participate in the oversight arrangements made by the local planning authority, including by attendance at pre-application hearings conducted by or on behalf of the authority, and requiring the payment of fees by the applicant for the oversight arrangements for a maximum period to be set out in regulations.”.’.
New clause 8—Pre-application stage of major infrastructure regime—
‘Section 51 of the Planning Act 2008 (Advice for potential applicants and others) is amended by the addition at the end of the following subsection—
“(5) Regulations under subsection (3) may also make provision for the oversight (including the giving of advice and opinions) by a person appointed by the Secretary of State of the preparations being made by an applicant in relation to a proposed application and the applicant’s compliance with the provisions of this Part and those having effect under it, and in doing so the regulations may require the applicant and any other person to participate in the oversight arrangements made by the person appointed by the Secretary of State, including by attendance at case management conferences, and the payment of fees by the applicant and for a maximum period to be set out in regulations.”.’.
New clause 9—Consents under Electricity Act 1989: powers of the Welsh Ministers—
‘(1) The Electricity Act 1989 is amended as follows.
(2) After section 36C insert—
“36D Consents under section 36 relating to generating stations in Wales
In relation to generating stations in Wales, sections 36 to 36C and Schedule 8 (so far as it relates to sections 36 to 36C) have effect as if references to the Secretary of State were references to the Welsh Ministers.”.’.
New clause 11—Infrastructure requirement—
‘(1) Section 39 of the Planning and Compulsory Purchase Act 2004 (sustainable development) is amended as follows.
(2) After subsection (2) insert—
“(2A) The person or body must exercise the function with the objective of identifying that there is, or will be, sufficient infrastructure to support new development that is proposed in a development plan document, or in a subsequent revision to a development plan document.”.
(3) In subsection (3) omit “subsection (2)” and insert “subsections (2) and (2A)”.
(4) After subsection (3) insert—
“(4) In this section ‘infrastructure’ has the same meaning as in section 216 of the Planning Act 2008.”.’.
New clause 12—Cumulative effects of development consents on climate change—
‘(1) The Planning Act 2008 is amended as follows.
(2) After section 13 (legal challenges relating to national policy statements) insert—
“13A Cumulative effects
(1) The Secretary of State shall publish on 6 April each year a report setting out the cumulative effect of development consents granted under this Act on the mitigation of, and adaptation to, climate change.
(2) A statement designated under section 5 must contain a statement to the effect that it is the Secretary of State’s view that the requirement of subsection (1) is ratified.”.’.
(3) In section 105 (decisions in cases where no national policy statement has effect), after subsection (2)(b), insert—
“(ba) the cumulative effect of development consents on the mitigation of, and adaptation to, climate change set out in the report published by the Secretary of State under section 13A;”.
(4) In section 105, at the end add—
“(3) For the purposes of subsection (2)(ba), the reference to the report published by the Secretary of State under section 13A means the last report published under that section.”.’.
Amendment 42, page 1, line 2, leave out clause 1.
Government amendment 5.
Amendment 43, page 36, line 2, leave out schedule 1.
Amendment 49, in clause 8, page 10, line 31, leave out
‘economic growth in the United Kingdom’
‘sustainable development and economic growth in the United Kingdom through the Government’s broadband programme.’.
Government amendment 6.
Government new clause 3—Variation and replacement of pre-Planning Act 2008 consents.
Government amendments 7 to 21, 33 and 34.
The Minister will know that some time was spent in Committee debating the true purpose of clause 1 and its inherent anti-localist, centralising agenda. We sought to test whether the Government had intended to produce a clause that would enable major planning discussions and decisions in designated authorities to be taken by the Secretary of State—usually by the Planning Inspectorate on his behalf—thus significantly reducing the influence that local people have on planning decisions affecting their area. Astonishingly, that did seem to be their intention. Their love affair with localism seems to have been short-lived.
A second major issue in Committee was the nature of the designation itself, whether the criteria to be used were fair and whether the Government should be going down the route of designation at all. If their purpose is really to improve decision making in local authorities, that does not appear to be the appropriate or sensible route.
We were somewhat hampered by the fact that the consultation document relating to the designation of failing planning authorities appeared only a very short time—in fact, less than an hour—before the Committee commenced discussion of clause 1. Since then, we have had the opportunity to consider the document in more detail. Unfortunately, the consultation document does not make happy reading, and I feel that I need to urge local authorities and others to respond to it by 17 January.
An authority’s track record of speed is to be measured over a two-year period, based on the percentage of major applications determined within statutory limits, and quality is to be measured by the percentage of decisions on major applications that are overturned on appeal. Both criteria have their problems, but overall the approach seems to use a sledgehammer to crack a nut. As we know, application of the first will draw in only a handful of authorities—even then, we are not sure how many—and the second none at all.
The Minister knows there is no evidence base for the measures in the clause, and they could put additional pressures on local authorities to agree to applications that, on balance, they might have refused. We know that is the case because of what happened in Committee. The Minister was given alternative criteria for designation that were much more in line with the localist agenda, such as being designated for failure to make decisions in line with the local plan. Unsurprisingly, he refused to accept the amendment.
As we heard in Committee, however, it is much worse than that. The Government are consulting on criteria, but the clause allows the Secretary of State to alter them, seemingly on a whim. The Minister was vague in Committee on whether changes would occur only after a period of consultation, and I hope he will be able to give us more clarification today. The power-grabbing tendencies of the Secretary of State, as endorsed by the clause, were also a continual theme of our deliberations. At no stage have improvements been made, despite the Minister being given numerous opportunities to do so through our amendments, and that should be regretted.
I ask the House to excuse me, as I have a terrible cold.
I am sorry to interrupt the hon. Lady’s flow to pick her up on a minute, but nevertheless important, point for those of us who love the English language. She will no doubt respond that this is purely a drafting error, but new clause 5 states:
“The purpose of the planning system is to positively promote the long term”.
In other words, there is a split infinitive written into her new clause. Does she approve of that, or would she like to change it on reflection?
On a more serious matter, new clause 5 states that planning should create sustainable development, and that “sustaining” means
“the potential of future generations to meet their own needs by respecting environmental limits.”
Does the hon. Lady think there is a limit to how many people England can accommodate, and does she think her Government exceeded that limit?
The right hon. Gentleman makes an interesting intervention, but I will not be distracted and will talk about that issue, because we have a serious matter in front of us—the measures contained in clause 1.
As I was saying, despite the Minister being given a number of opportunities to improve the clause in Committee, alas he did not take any of them on board. That was a pity, because our amendments sought to make the designation system more transparent and more accountable than just relying on the thoughts of the Secretary of State. As we know from Communities and Local Government questions earlier, those thoughts can at times be a bit alarming. He was telling us today that green is brown and brown is green, and he has often told us that down is up and up is down, so I am not at all sure where the Secretary of State’s thoughts on the clause would lead us. We are saying that we need to define what requiring local authorities “to do things” could possibly mean. I will not rehearse our long and interesting discussion in Committee about what that could mean, but it is truly extraordinary that we are being asked to adopt legislation allowing the Secretary of State “to do things” that are as yet ill-defined.
I raise those points to demonstrate the need for amendments 42 and 43, which would remove clause 1 and schedule 1 respectively. The Opposition consider this an extremely important matter, and, if possible, unless the Minister provides reassurances that have not yet been forthcoming, we will, at the appropriate point, seek to divide the House on amendment 42. We are totally against local authorities being designated as failing in the way he suggests and we do not believe that it will improve the performance of local planning authorities. Instead, it is very likely to lead to inappropriate development, as the Town and Country Planning Association said so powerfully in its evidence. It also pointed out—he needs to take this on board—that it could lead to a breakdown in trust in the planning system. As the consultation paper looks to be seeking to rubber-stamp the criteria put forward for designation and as the Government have made no effort to improve the clause to make designation and its operation more democratic, we had no alternative but to table an amendment to remove this thoroughly bad clause.
New clause 5 would provide an alternative approach to planning that we think the planning Minister needs to adopt as soon as possible. It would include in the Planning and Compulsory Purchase Act 2004 a definition of the purpose of planning. As hon. Members have pointed out, it is important to change the whole debate about planning. Instead of being presented simply as a brake on growth or somehow preventing growth, we want planning to be used to develop sustainable communities. The new clause would set out the need for planning policy to
“positively identify suitable land for development in line with the economic, social and environmental objectives so as to improve the quality of life, wellbeing and health of people and communities”.
The right hon. Gentleman raises an interesting point. It might be helpful if we discussed how to judge what is beautiful in civic terms. I will happily engage with the Minister on how we might set up such a system. We could have citizens’ panels and they could get advice from relevant bodies around the country. If the Minister were to adopt the new clause and discuss with us how the measures in it could be delivered, it would be a helpful and constructive way forward, so I am grateful to the right hon. Gentleman for his intervention.
As I was saying, we think that the system should look at
“the quality of life, wellbeing and health of people and communities... contribute to sustainable economic development…protect and enhance the natural and historic environment and quality of existing communities and the countryside…ensure long term sustainable patterns of resource use”
and, as I said and as the right hon. Gentleman just highlighted, it should
“positively promote civic beauty through high quality and inclusive design; and…ensure the planning system is open, transparent, participative and accountable.”
None of that, however, has been taken on board by the Minister. In fact, in their rush and desperation to be seen to be doing something to produce growth, the Government have forgotten the real purpose of planning. Planning is a tool for people to shape places positively and for communities to ensure that they have homes for their children and developments that are beneficial to them and the economy. The Government seem determined to characterise planning solely as an obstacle to growth—clearly an attempt to disguise the fact that their policies are the real brake on growth and what we should be resisting.
New clause 6 deals with the separate issue of changes to permitted development rights. It is an extremely important measure so I will spend a couple of minutes going through its purpose. Let me take the House back to the written statement by the Secretary of State for Communities and Local Government on 6 September 2012. It was one of the panic measures brought forth on that day to suggest that the Government were doing something to address the need for growth, and the Minister has referred to the statement on numerous occasions.
The Secretary of State said:
“We will consult shortly on changes to increase existing permitted development rights for extensions to homes and business premises in non-protected areas for a three-year period.”—[Official Report, 6 September 2012; Vol. 549, c. 34WS.]
The Minister will know that the policy has met with widespread derision, not least from his own Back Benchers who are extremely worried about suddenly having permitted development—and the extensions and conservatories that go alongside it—extended from 4 metres to 8 metres for detached properties, and from 3 metres to 6 metres for semi-detached or terraced properties. As we know, that policy applies also to business premises.
Conservative Back Benchers are concerned about those huge extensions. I know that, because while wandering along the corridors they have told me that they agree with the Labour party’s stance on the issue, and that they are pleased I am asking the Government for a greater explanation of why these measures are being proposed. Does the Minister really intend to press ahead with these ideas given the huge outrage they have led to across a range of local authorities, including—significantly—the Local Government Association? I will come to some of the points made by the LGA in a minute or two.
In his written statement, the Secretary of State said that he would bring forward a consultation document, which he has done. That allows me to say that this interesting Bill has, I think, been accompanied by more consultation documents than any other in history; we are up to four—or is it five? I am nervous about mentioning consultation documents when the Minister is about to reply, because I usually find that yet another one will just have been announced. With that caveat, however, I will plough on.
The consultation document states that the policy is to allow people to build conservatories and the like while respecting the amenity of neighbours. Once again I ask the Minister how that will be achieved without a planning system to negotiate between the two neighbours involved. The Minister will know that on a number of occasions councils have had to step in and use their planning powers to ask that extensions be removed, because people have gone ahead and built them without planning permission. That has greatly upset the neighbours by intruding on their amenity and the reasonable use of their property. My point is that the planning system had to step in and sort out the problem, but the Minister is giving people up and down the country a licence to build completely inappropriate extensions that will have to be sorted out by a planning authority at a future date. New clause 6 therefore seeks to give local authorities the power to decide whether to extend permitted development rights and whether the proposal should go ahead at all. The Opposition believe that the new clause is important. It is in keeping with localism, which the Minister says he supports, and we therefore cannot see any reason he would not accept it.
That is also the view of the LGA, which the last time I checked, which was not that long ago, was under Conservative control—[Interruption.] I am prompted by my right hon. and hon. Friends to say that it is under Conservative control for the time being. The LGA has noted that local authorities should be allowed to set their own permitted development rights. The LGA states:
“The current system allows central government to set out permitted development rights and provides local authorities limited”
“to amend this.”
It would like the current system to be reviewed. It says that allowing permitted development rights to be set at local authority level would allow for the consideration of individual local issues and could lead to a boost in development overall, and that the new clause would be a truly localist measure, further empowering democratically elected representatives. I could not agree more. If the Minister is not prepared to pay attention to the Opposition, I hope he might at least pay attention to his Conservative local authorities, which clearly ask that he acts on localism and gives them the power to decide whether to extend permitted development rights.
Lastly, amendment 49 deals with a completely different issue—as I said a number of times in Committee, the Bill is a rag-bag of measures that the Government have proposed in the hope that they suggest that they are doing something about growth, so it necessitates jumping from one issue to another. We have concerns that clause 8 will make it easier for telecommunications equipment to receive planning consent even in areas of outstanding natural beauty and national parks. The intention is for the measure to apply only to broadband cabinets and related infrastructure. The Opposition fully support steps to increase access to broadband, but there is a lack of clarity in clause 8, which relates not specifically to broadband but covers all telecommunications equipment. Amendment 49 would ensure that the clause is restricted to broadband, and to broadband that is developed sustainably. It would leave out
“economic growth in the United Kingdom”
“sustainable development and economic growth in the United Kingdom through the Government’s broadband programme.”
Given the Government’s commitment to sustainable development and their stated intent to limit the clause’s application to broadband equipment, I hope the Minister supports such an amendment.
The promotion of broadband is vital. The amendment does not seek to prevent the roll-out of broadband, and particular the roll-out in rural areas, but simply seeks to limit the scope and potential damage that could be inflicted on such beautiful areas by the clause. If the Minister accepts the amendment, he would reassure the many campaign groups that are justifiably concerned about the lack of clarity in the clause and about how it could cover a huge amount of communications equipment. Indeed, the Communications Act 2003 describes a
“wide range of electronic communications services”,
and it is that that gives us and a number of campaigning groups concern about clause 8 as drafted.
Will the hon. Lady tell the House what preliminary view she has taken of new clause 11, tabled by my right hon. Friend the Member for Arundel and South Downs (Nick Herbert), and whether she is broadly sympathetic to it? I realise that she has not yet had a chance to hear my right hon. Friend’s arguments, but is she open to the proposals in the new clause?
I thank the hon. Gentleman for that intervention, and I will deal with that point in just a moment.
I was talking about the wide range of infrastructure that could be allowed to develop in areas of outstanding natural beauty, in our national parks and in conservation areas, if clause 8 were not amended. Many Members on both sides of the House would be gravely concerned if broadband masts, wires and cabinets—let alone any other communications equipment—were suddenly allowed to spring up all over our national parks, and the Government have not yet given sufficient reassurance on the issue. We have no idea how local authorities would be able to oppose inappropriate siting of overhead cables or broadband cabinets if they had to make economic development their overriding criterion. I have made it clear that we are not against the roll-out of broadband; we just think that the clause is incorrectly worded at present.
The Minister claimed in Committee that it was not possible to specify broadband in the Bill owing to European legislation. I asked him at the time to point to the precise area of European legislation that prevents the Government from specifying it in that way, but I am still waiting for that clarification. I hope that he will be able to answer the question today.
Some groups, including the Campaign to Protect Rural England, have called for clause 8 to be deleted in its entirety, not least because it would set a worrying precedent in legislation. It seems to propose the scrapping of the special and rightful protection that is offered to our national parks and areas of outstanding natural beauty, and to allow telecoms companies to install cabinets and masts in a free-for-all without securing permission from the relevant local authority. That would be unacceptable, and I hope that the Minister will take on board our concerns and those of the many organisations that have written to us about the proposal. I hope that he will give us an idea of how he intends to limit the impact of the clause on those beautiful areas, because we do not believe that it strikes the right balance at the moment.
The hon. Member for Reigate (Mr Blunt) asked me about new clause 11. I have looked at the proposal in some detail, and it makes a number of interesting points, but we feel that they are already dealt with in the planning system. Indeed, the hon. Gentleman might like to have a word with the Minister responsible for planning about how he will ensure that the national planning policy framework addresses the issue of planning policy shaping communities. I would say that our new clause 5 does a better job, because asking for such a positive view of planning and using it to shape our communities would mean that, in addition to looking at the need for new housing, we would look at the need for schools, jobs, a proper roads network for public transport, and so forth. It therefore seems to me that our new clause 5 positively supports new clause 11. I shall leave my comments there for the moment.
I rise to speak to new clause 11, which is in my name and supported by 16 right hon. and hon. Government Members, including Liberal Democrat Members, several former Ministers and senior Members of Parliament, who share my concern about the adequacy of local infrastructure to support new development. My right hon. Friend the Member for Mid Sussex (Nicholas Soames), who feels strongly about this issue, and my right hon. Friend the Member for Sutton Coldfield (Mr Mitchell) have asked me to give their apologies for being unable to be here: they have expressed their concern about the issue and have supported my new clause. Since I tabled the new clause late on Thursday evening, a number of other Members have indicated that they would like to support it.
The starting position is one I wish to make completely clear, and I believe it is shared by my right hon. and hon. Friends: new housing is necessary. The Minister with responsibility for planning, the Under-Secretary of State for Communities and Local Government, my hon. Friend the Member for Grantham and Stamford (Nick Boles) is absolutely right to remind the House and the public of the necessity to ensure that there is housing provision, particularly for young people who are unable to get their foot on the housing ladder at the moment, and to get house building going again.
There is no desire on my part to challenge that argument, but the principle enshrined in the Localism Act 2011, to which I believe all Members subscribe, is that development should be sustainable. That means by definition—I share the Government’s definition—that the enjoyment given to the current generation should not make life worse for successive generations. Many of my constituents, and parish and district councils in particular have expressed concern that the local infrastructure is insufficient to support the additional development that has already been undertaken.
I mentioned on Second Reading that the drainage in my constituency is so inadequate that after heavy rainfall households face the problem of sewage rising in their gardens or running in the streets, and people have to ensure that their loos do not back up. That is an intolerable situation for residents in my constituency.
The hon. Gentleman certainly raises a related issue. It is essentially part of the same principle, which is whether the development that takes place is or is not sustainable. There is obviously a great deal of concern about building on floodplains as well. Even where building takes place and it is not on a floodplain, it is essential to ensure that there is sufficient local infrastructure to support that development. It is not just a question of adequate local drainage, as it is also a question of ensuring that there are sufficient local school places and that the road network is sufficient to support the additional population. In villages throughout my constituency, we have found that that infrastructure has not been provided despite the additional development, and it is feared that further development would exacerbate the problems.
Is my hon. Friend aware of the Ridgeway Farm development in Purton, in my constituency, where it was agreed this week that 700 houses would be built in an area where there are no schools, where the roads are tiny country lanes and there is no access, where the hospital is jam-full, and where the local villages have been flooded in the last couple of weeks? It is an entirely unsustainable development, but the inspector in Bristol has allowed it to proceed.
My hon. Friend has given a very good example of the local concern that is generated when there is inadequate infrastructure to support development.
Where is the mechanism requiring planning authorities to ensure that the necessary local infrastructure is in place when development is permitted? I repeat that the purpose of the new clause is not to prevent necessary housing from being built, but to ensure that it is built at sustainable levels and in the right places. We have to ask why, if the mechanism is adequate now, the circumstances that I have described have already arisen. There is clear evidence that the existing mechanisms are inadequate.
We are moving from a system whereby the gain from development was captured under section 106 agreements to a system involving a community infrastructure levy which, I understand, is intended to ensure that investment can be made in local infrastructure. My constituents will want to hear from the Government how that new system will work, and to be assured that when new housing is proposed under the development plans that local authorities are now undertaking, there will be a mechanism to ensure that the necessary infrastructure is provided along with it.
As local authorities—a good example being my local authority in Winchester—develop their new local plans, which they are directed to do under the Localism Act 2011, they are getting perilously close to the numbers in the south-east regional spatial strategy, which my right hon. Friend and I share, or almost shared. I wonder whether anxiety about that situation underlies the new clause.
My hon. Friend is exactly right. It is a related issue. Although regional spatial strategies are being abolished—which is overdue but nevertheless welcome—there is a widespread fear among local authorities that planning inspectors will overturn their own assessments of the level of need in local areas, and that they will be unable to balance what could, in many areas, be a near-infinite level of demand with their ability to provide housing.
My right hon. Friend has made an interesting point about need and demand. The Government have stated clearly that they will cut net inward migration from a quarter of a million a year to a few tens of thousands. Presumably councils should take into account the sharp deceleration in the need for new households.
That raises the question of the process whereby councils are now assessing need, and the potential confusion between need and demand. I think that communities will feel cheated if, having been promised the abolition of the top-down housing target that was set by the last Government—effectively by means of the regional spatial strategies—they see it returning through the back door in the shape of a planning inspector, and if local authorities find that they have no choice but to provide a level of housing that they consider to be unsustainable.
Let me make it clear to my right hon. Friend, and to the Minister, that that is precisely what is happening to Reigate and Banstead borough council. Its draft plan has been kicked back by the inspector to “show again”, because it simply does not meet what he believes to be the required development objectives in the green belt. The council is being invited to review the green belt in its area, which is meant to be sacrosanct. It is not just in the case of ordinary developments that localism is being overturned.
My hon. Friend makes his point powerfully. The principle of localism is enshrined in the very name of the legislation recently mentioned and was set out in the coalition agreement. Under that principle, local communities should now have the power—on an objective assessment, I agree—to gauge the level of need. They are best placed to determine whether there is sufficient local infrastructure and what the environmental damage would be, and balance that against the economic needs of their area. They are best placed to determine the right level of housing in their area.
Does my right hon. Friend agree that often what statutory consultees such as the utility companies and the Highways Agency assure people is sustainable for the local infrastructure does not tie up with the reality of people’s everyday existence on the ground?
I agree, and one problem is that some of the agencies charged with giving a statutory response to draft development plans do not properly engage with those plans or give an assessment of the impact on roads, schools, drainage and water supply and so forth which accurately grapples with the increase in demand. There is not a properly joined-up process.
I suspect that the Minister will point me to the new national planning policy framework, which says that local planning authorities should work with other authorities and providers to
“assess the quality and capacity of infrastructure…and its ability to meet forecast demands”.
The provision does not, however, quite say that local authorities should ensure that local infrastructure is sufficient to match demand, but that is what the new clause says. It places a statutory duty on planning authorities to identify the demand on infrastructure caused by a new development. That is a stronger duty than under the national policy framework.
I recognise that there is little time left, and I am anxious to hear the Minister’s reply, but I want to impress upon him that since I tabled the new clause just a few days ago many Members of this House, as well as many members of the public and councillors, have expressed concern about the issue. There is widespread concern about it. There is insufficient provision in existing legislation to ensure local infrastructure is provided when necessary development is put in place.
Order. As Members know, our discussion of this group of amendments is timed to conclude at 5.45 pm, and I want to give the Minister at least 10 minutes to respond. The next speaker will be Mr Jonathan Edwards. I ask him to sit down by 5.35 pm.
I will cut my speech in half in order to give my colleague, the hon. Member for Brighton, Pavilion (Caroline Lucas), a chance to speak to her new clause in this group.
I and my party believe that the natural resources of Wales should be harnessed for the benefit of the people of Wales. I am very concerned that any future exploitation of the ground for its mineral wealth, particularly through fracking, would see its riches and the money it generates leaving Wales, without its people benefiting from any of that potential.
The people and communities of Wales still bear the scars of the coal rush, which fired the British state and its empire yet there was an abject failure to leave any of the fruits of its riches in a legacy of prosperity. My new clause 9 was written with that in mind. It will address an anomaly in the devolution system across the British state, as the powers in question are already devolved in Scotland and Northern Ireland. If my new clause is accepted by the Government or passed following a Division, Welsh Ministers will have responsibility for all energy-generating planning applications in my country, instead of there being the current arbitrary and insulting 50 MW limit.
Wales is in the bizarre situation of being an energy-rich country in both mineral and renewable resources yet having one of the highest rates of fuel poverty in the UK. According to the Welsh Government, we have the potential to produce double the electricity we require for our needs. According to the Department of Energy and Climate Change here in London, we are a net exporter of electricity, yet energy prices in Wales are among the highest. Earlier this year, I presented a simple and reasonable Bill to Parliament to ensure that energy planning policy was devolved to the Welsh Government so that they could plan their energy projects coherently. It sought to put Wales on an equal footing with Scotland and Northern Ireland, and it was open to other MPs to amend it and make their own suggestions. It was an opportunity for the Labour party to introduce proposals from its manifesto, on which the Welsh Government were elected last year, but the vast majority of their MPs in London were strangely keen that Wales should not have those powers.
My Bill had cross-party support, but despite a few notable and honourable exceptions it was voted down. Labour MPs from Wales voted with the Tories. To be fair to the Lib Dems, most of their MPs voted to support the Bill and I look forward to their support later this evening.
Does the hon. Gentleman therefore consider Labour’s position on the devolution of projects providing up to 100 MW, which would include the vast majority of wave and tidal power schemes and many others, to be good and sensible, not least because it recognises that larger UK national infrastructure schemes, such as a Severn barrage scheme, were it ever to happen, are of interest to England and Wales?
I am grateful for that intervention and I welcome the hon. Gentleman to the world of Twitter —he was tweeting in Welsh over the weekend and I was very pleased to see it. I shall come on to Labour’s current policy later in my speech.
As I introduced my Bill, I said that the people of Wales were extremely protective of their natural resources. Naturally, as a result of the vote there was a public outcry in Wales, with Labour accused of betrayal. Subsequently, the First Minister made a public statement that the Labour party, despite the voting record of its MPs, supported total control over energy planning policy. His Government then published an energy policy document that highlighted how the sector was key to the future of the Welsh economy. I could not agree more, which is why I have introduced my new clause this evening.
I hope that, if pushed to a vote, the Lib Dems will maintain their principled position. If Labour MPs sit on their hands or join the Tories in the Lobby, the credibility of Carwyn Jones will be shot to pieces. The shadow Secretary of State for Wales has said today in the Western Mail, in response to my new clause, that Labour in Westminster supports the devolution of planning for energy projects only up to a limit of 100 MW. That shows a complete lack of coherence between Labour in London and Labour in Cardiff. It flies in the face of and contradicts the wishes of the First Minister, who said in March that he did
“not see why 100 MW should be the limit in the future.”
In addition, in June this year, John Griffiths, the Minister for Environment and Sustainable Development, stated that
“the Welsh Government…wishes to have further devolution of power over energy”
and “do not limit” themselves at 100 MW.
During a recent “Sharp End” interview, the First Minister adopted Plaid Cymru’s position and said that he wanted full control over energy planning policy. If energy policy is the key to the future of the Welsh economy for jobs and growth—I am certain that it is—why should a 100 MW limit be set? Total control over energy planning policy would allow the Welsh nation best to decide its energy future and would be essential in driving growth in our economy.
From a good governance point of view, there needs to be consistency in planning policy. Having two different authorities responsible for policy is a disincentive for investment, leads to a lack of coherence in energy and economic strategy and is awfully complicated for my constituents. I have two technical advice note 8, or TAN 8, areas in my constituency, which are designated zones towards which the Welsh Government direct onshore wind development. The projects under 50 MW are determined by the local planning authority and those above are determined by Ministers here in Whitehall. Local people experience a huge difference when dealing with both authorities. With the LPA, they have direct access to planning officers and local councillors, whereas not a single official or Minister has even bothered to come to north Carmarthenshire to discuss with them the Brechfa Forest West development, which has just landed on the Secretary of State’s desk in London. The arrangements lead to a huge democratic deficit and my surgeries are constantly filled with angry and disillusioned people. My new clause would help to deal with that.
I have tabled a modest and reasonable amendment that would enable the people of Wales better to plan our energy infrastructure over 50 MW on a par with Scotland. It will also help the Welsh Government play their part in helping the UK Government to achieve the aims of this Bill, leading to greater policy coherence and unleashing the economic potential of Wales’s energy resources. If Ministers refuse to accept the new clause, I am minded to press it to a Division.
I apologise to the House and to Members who tabled new clauses and amendments and have not had a chance to speak. I hope that the House will understand if I focus on amendments that are new on Report, rather than those tabled in the Bill Committee, where we had a full discussion, although I will of course return to clause 1 and the justification for it at the end of my brief remarks.
I shall start by addressing new clause 11, proposed by my right hon. Friend the Member for Arundel and South Downs (Nick Herbert) and a range of right hon. and hon. Friends. The Government and I share completely my right hon. Friend’s emphasis on the vital importance of infrastructure to support new development. Indeed, one of our main criticisms of the record of the previous Government was their complete failure to ensure that it was put in place. Ironically at a time when money, both public and private, was more available than ever before, infrastructure was simply not provided for.
The effect of the new clause tabled by my right hon. Friend the Member for Arundel and South Downs (Nick Herbert), to which I put my name, is “must,” rather than “should,” which is the position I believe the Minister is about to defend, and “must” speaks to the arguments he has just made.
My hon. Friend anticipates the meat of the argument I want to make, but perhaps I could return to my point. It was in response to the failure of the previous planning regime to provide the infrastructure to support development and make local authorities and local communities feel empowered to shape their communities and their future that this Government produced the national planning policy framework and the Bill that became the Localism Act 2011. It is important to understand that while the national planning policy framework is indeed only policy, it is an incredibly carefully constructed and negotiated balance of measures. Taking one measure out of the framework and putting it into primary legislation, when no other part of it would be there, would be to up-end the balance, and would give primacy to one—very important—element at the expense of other important elements of the framework.
As the Minister may know, the borough unitary I mainly represent—Wokingham—has a local plan. It has identified land for 12,500 houses, which is a massive increase in development and well beyond the number many of my constituents would like. The authority has been prepared to argue the plan through; it wants to concentrate the development to get money for the infrastructure mainly from private sources, but the Minister decided to grant permission somewhere else, completely undermining the negotiations the authority wants to hold with the private sector. How does that help to get infrastructure?
My right hon. Friend accuses me of things I have not done, but I am happy to take responsibility for all decisions of the Government, whether quasi- judicial or otherwise.
Perhaps I could return to the argument, because it is important. My right hon. Friend the Member for Arundel and South Downs made the very good argument that over the past 10 to 30 years local authorities have not been in a position adequately to provide the infrastructure improvements required to support housing and other kinds of economic development. I should like to try to persuade him that it is not because the provision is not in primary legislation as a duty—as a must, rather than a should—that the failure has arisen; it is because there have not been dedicated sources of revenue to support infrastructure. It is not that local authorities are out there saying, “We want to build 5,000 houses and not build any more roads and primary schools and not put in better sewers.” It has not happened because they have not had dedicated revenue streams to do it.
Perhaps I could finish; I do not have much time.
The Government have put in place a huge range of specifically targeted measures to ensure that a funding stream is in place. That is why we supported the previous Government’s innovation of the community infrastructure levy, which is due to deliver £1 billion a year of infrastructure funding directly to local authorities; they will have to provide a list of infrastructure improvements so that developers know that they are making a contribution to specific matters, whether roads, drainage, schools or other things. We have also allocated £730 million to local enterprise partnerships.
I have very little time and I need to get on to clause 1. I hope the hon. Gentleman will forgive me if I do not give way right now.
The autumn statement a few weeks ago included another round of £350 million for the regional growth fund and a new local infrastructure fund worth up to £470 million. I hope my right hon. Friend and my other right hon. and hon. Friends will understand that it is not primary legislation that will ensure that local authorities plan properly, as they should, for infrastructure; it is money. Part of the way to get that money is to plan positively for development, because that development will bring the community infrastructure levy and the new homes bonus.
I had the good fortune to be born in the Thames valley and I represent a constituency in the Thames valley. In my lifetime I have watched tens of thousands of homes being built and many industrial estates and business parks. The M4 motorway has never been widened and the hospital has never been built to serve the community that has grown so much. Can my hon. Friend confirm that the levy to which he refers goes towards a new motorway and a new hospital? My region desperately needs them.
It will be for my hon. Friend’s local authority to specify the infrastructure. Those are good examples. The money could go towards a hospital, a school, drains or whatever is required. He is right that that has not been available previously.
Finally, on new clause 11, I make this promise to my right hon. Friend the Member for Arundel and South Downs. We are currently looking at all the planning guidance that is provided to local authorities about how they should go about interpreting the national planning policy framework and putting that into their local plans. Although I do not want to up-end the careful balance of local plans by putting this in primary legislation, I will look at making sure that the guidance that is provided in a much reduced set of planning guidance is very clear about the need to plan positively and specifically for infrastructure that is required to support the development and to ensure that it is brought on stream in good time for that development.
I turn to the general arguments about clause 1. The hon. Member for City of Durham (Roberta Blackman-Woods) and I have debated this at some length over the past few months. It has been my sole objective since the autumn to provide satisfaction to her, so it is a matter of great regret that I seem to have failed in this mission. I will try one last time on clause 1 to persuade her that her fears can be allayed and she, too, can embrace this extremely restrained proposal.
We hope that vanishingly few local authorities will be caught by the measure, but just as we accept that some schools fail and require intervention, and that Ofsted is the right judge of whether they are failing, and some hospitals fail and the Care Quality Commission is the right judge of whether they are failing, we believe it is our responsibility as Government to identify where some—very few—local planning authorities are failing to discharge their responsibilities to local people. That is why we are introducing the clause.
I have good news for my hon. Friend. I had discussions with the Local Government Association just a few days ago. Because of the proposal on which we are consulting, which is that it should be two years of data about the timeliness of decisions on major applications, it will become clear, probably publicly but certainly to my officials and to officials in the Local Government Association, which authorities are heading into the danger zone, even after probably only six months’ data.
I have had discussions with the Local Government Association, with full support from the Department and my officials putting an arm round those authorities that are beginning to get into the danger zone and helping ensure that they get out before the axe falls—before the designation becomes real. It is my genuine hope that no local authority gets caught by the provision, because no local authority consistently fails to discharge its responsibilities.
The statistics currently capture planning performance agreements that are agreed before an application is submitted, but not those that are agreed after. We will be altering that to ensure that the data are more accurate. Where we cannot do that, what we can do, which I think is just as good, is take submissions from local authorities on why the data might not present a fair picture of their performance, and we will of course take fully into account the fact that the data might not be absolutely conclusive for those submissions in year one.
Finally, new clause 12, tabled by the hon. Member for Brighton, Pavilion (Caroline Lucas), is incredibly well intentioned, but we believe that the national planning policy framework and the local plans already contain all the emphasis on sustainability, environmental quality and protection of rights and heritage for future generations—
Debate interrupted (Programme Order, this day).
The Deputy Speaker put forthwith the Question already proposed from the Chair (Standing Order No. 83E), That the clause be read a Second time.
The Deputy Speaker then put forthwith the Questions necessary for the disposal of the business to be concluded at that time (Standing Order No. 83E).
Amendment proposed: 42, page 1, line 2, leave out clause 1.—(Roberta Blackman-Woods.)
Question put, That the amendment be made.
Amendment made: 5, in clause 1, page 2, line 37, after ‘authority’, insert ‘or hazardous substances authority’.—(Nick Boles.)
Modification or discharge of affordable housing requirements
With this it will be convenient to discuss the following:
Amendment 4, line 5, at end insert—
‘(1A) This section does not apply to any planning obligation relating to development—
(a) in a National Park,
(b) in an area designated as an area of outstanding natural beauty,
(c) in an area designated as a rural area pursuant to section 157 of the Housing Act 1985, or
(d) for which planning permission was granted by a neighbourhood development order.’.
Amendment 45, line 18, leave out ‘means’ and insert ‘is assessed by the local authority to be the foremost reason.’.
Amendment 44, line 24, at end insert—
‘(3A) The Secretary of State shall make an order by Statutory Instrument setting out the criteria by which viability is to be assessed.
(3B) An order shall not be made under subsection (3A) unless he has consulted those persons or organisations he considers to be appropriate and a draft of the Order has been laid before, and approved by resolution of, both Houses of Parliament.’.
Amendment 46, line 40, at end insert ‘or,
(e) request that the requirement is to be met in part, or in full, by central government funding allocated for the delivery of affordable homes.’.
Amendment 47, page 7, line 8, at end insert—
‘(7A) Where the local authority has reasonable grounds to believe that the value of the land, on which planning consent with a planning obligation that contains an affordable housing requirement is placed, has risen and the original obligation has not been reasonably met at the end of one year they may—
(a) determine that the requirement is to have effect subject to modifications,
(b) determine that the requirement is to be replaced with a different affordable housing requirement, or
(c) determine that the requirement will be subject to review within a given time period.’.
Amendment 48, line 31, after ‘market’, insert
‘but not including requirements for land on the site to be reserved and transferred at nil cost to a local planning authority or registered provider of social housing.’.
I draw attention at the outset to my interests as declared in the register.
It is widely agreed, I think, that clause 6 is unsatisfactory. It is clearly based on conjecture and prejudice, rather than evidence. It was put together in a hurry, without adequate thought about its likely consequences, and there is a wide view that it is likely to have damaging impacts, not least on the provision of affordable housing. Ideally, the clause should be withdrawn. However, if the Government persist in promoting it, it is at the very least essential that it be amended to prevent some seriously damaging impacts on well-established mechanisms for the delivery of affordable housing. The purpose of amendments 3 and 4, which have been tabled in my name, is to prevent the destruction of a mechanism that has been in place for 25 years or more and that has secured a great deal of affordable housing, particularly in rural areas.
The other amendments in this group have been tabled in the names of my right hon. Friend the Member for Leeds Central (Hilary Benn) and my hon. Friends the Members for City of Durham (Roberta Blackman-Woods) and for Edinburgh South (Ian Murray) on the Opposition Front Bench. They seek further amendments to the clause in order to offset some of its unfortunate consequences. I will not speak to those amendments; I will simply speak to amendments 3 and 4.
The issues were debated in Committee and were raised as a consequence of the evidence presented to us by Dr Nigel Stone of the English National Park Authorities Association. What was clear during the evidence sessions was the overwhelming weight of expert opinion against clause 6. Planning experts from the Royal Town Planning Institute, the Town and Country Planning Association and the Planning Officers Society joined representatives from local government, politicians and officers in condemning the clause as inappropriate and damaging. In his telling evidence, Dr Stone said that, as drafted, the clause could fatally damage the policy of rural exceptions, which has worked, as I have said, for more than 20 years and allowed the provision of affordable housing in a substantial number of areas where commercial housing development would not usually be acceptable.
The policy is called the exceptions policy because, exceptionally, it allows affordable housing—which may be social housing for rent, but could equally be low-cost home ownership—on the clear understanding that that housing will, in perpetuity, be kept available for the needs for which it was produced and that it will never be converted into market housing. The reason for that is obvious to everyone who cares about national parks, areas of outstanding natural beauty and rural areas where the beauty of the landscape would be seriously compromised by indiscriminate, speculative development. Such areas need people to work to help the local economy and desperately want to keep existing rural communities alive with opportunities for long-term residents to continue to live in the villages in which they were born and brought up.
Does the right hon. Gentleman not understand that the Minister’s intention is very simple and sensible? He does not want a commercial development of homes to be prevented by an affordable housing target that is not realistic for that development. Surely it is better to have some housing than none.
If the right hon. Gentleman will bear with me, he will realise that, actually, the consequence of what the Minister is trying to do would be to destroy a policy that dates back to the days of the Conservative Government of the 1980s—I believe that the right hon. Gentleman was strongly supportive of them—who allowed it to come into being in order to ensure that it was possible to create affordable housing to meet needs in areas where there would usually be outright opposition to market housing. The reason for that outright opposition is that such developments would seriously compromise the character of an area. The rural areas in question do not want a mass of indiscriminate private sector development, but they do recognise the need for some homes for people who need to live and work in those communities. That was the basis of the policy, which was a product of his party’s Government. It was supported by my party, has remained in operation for more than 20 years and has secured a good supply of affordable housing to meet special needs. I would have thought that he would have welcomed it.
I am sorry to have to remind the right hon. Gentleman that it is his Government who have been in office for the past two and half years, over which time the economy, at the very best, has been grinding along on the bottom as the result of his party’s mismanagement of it. I do not, however, intend to go down that route. I want to return to a policy that has received widespread support from Members of all parties, including some of his hon. Friends, who have specifically welcomed my amendment. I hope that after he has listened more to my argument, he will recognise that there is logic to the amendment.
The exceptions policy has evolved to meet special needs without opening the floodgates to more indiscriminate development, which would have otherwise happened because the areas concerned are often highly attractive and desirable areas where there would be considerable financial return from building commercial housing.
Hastoe Housing Association is probably the specialist body in this field and its chief executive, Sue Chalkley, joined me and a number of other experts to talk to the Minister about the issue. I am extremely grateful to him for making time available to hear our case and hope he was persuaded by it. Hastoe describes its role as
“a rural specialist housing association”
“developed affordable homes for local people in more than 200 villages across the south of England. Most of these schemes are on Rural Exception Sites.”
Its briefing goes on to explain how the process works:
“The Parish Council approaches us for assistance because they have identified that local people need affordable housing. We arrange a housing needs survey to evidence the need. We then walk around the village, with the Parish Council and planners, to identify site options.
The sites are very often just outside the village envelope and are usually, but not always, farm land. They are ‘exception sites’”,
as defined by the national planning policy framework. The briefing continues:
“We agree the preferred site with the Parish Council and planners and discussions are held with the landowner about purchase.”
The following is the crucial part:
“The price for an ‘exception’ site is an enhanced agricultural value, averaging £8,000 per plot.
Tenures can be affordable rent or shared ownership. Shared owners cannot buy more than 80% of the equity, so the homes remain affordable for future, generally local, purchasers.
The NPPF allows a small number of market sale homes on exception sites to help the financial viability of schemes where grant subsidy is limited.
The S106 agreement provides landowners and communities with confidence about the future use of the land; that it will always be prioritised for local people and always retained as affordable housing.
The delivery of new homes on exception sites requires willing landowners and willing communities. There are often only one or two landowners in rural communities and, without their co-operation, no homes will be built. We need their co-operation.”
Sue Chalkley stresses that the process gives confidence to all parties that such homes will for ever be kept available for the need for which they were developed, and will not simply become market housing by the back door. The section 106 agreement is crucial to that process. Without it, landowners are inevitably reluctant to provide land, because they can see the risk that sites that they sell substantially below open market value—I have quoted the figure of £8,000 for enhanced agricultural value—might produce a windfall gain to some future occupier who is fortunate enough to find that the property is saleable on the open market. That is the first problem.
The second problem is that communities that have agreed to an element of affordable housing on the basis that it is for people in need would be horrified if the policy could be subverted and the properties could become available as open market homes, rather than be used for the specific needs for which they were approved. Landowners and communities would have a crisis of confidence in the policy if clause 6 was passed unamended.
In Committee, I gave the Minister one example of how the policy could be subverted, but I have now highlighted a number of other ways. The first example that I quoted was an individual working in forestry in a national park being helped by a national park authority to get permission for an individual, self-built home for his needs. If that individual received consent for an exceptions home, but it subsequently became unviable because the builders’ prices had gone up or because he could not get a loan from the bank because of the mortgage difficulties that the right hon. Member for Wokingham (Mr Redwood) mentioned, he could say that it was no longer viable to proceed with the development as agreed. Under the provisions of clause 6, he would be entitled to ask the planning authority—in this case it would be the national park authority—to reconsider the section 106 agreement because it was no longer viable to proceed with building the home.
The legislation gives no let out. It does not allow the planning authority to consider the wider social impacts or the needs of the community. It simply requires it to look at financial viability. If the argument is a sound one—and in the scenario that I have quoted it is—the planning authority will ultimately have to say that the person has a strong case. However, it might decide to refuse the request because if it agreed, it would subvert the exceptions policy and destroy the confidence of local people in it, meaning that landowners would no longer provide land for such developments and local communities would no longer agree to them.
Then, of course, the next ghastly consequence of the clause bites, because at that point the decision is referred to the Planning Inspectorate, which has a remit to consider only viability. It does not have a remit to consider whether a development is desirable, whether it would subvert the exceptions policy, or whether it would result in inappropriate development in a national park or area of outstanding natural beauty. It is required to look only at viability. If it does so on the terms that I have described, it will inevitably find that the section 106 agreement has to be amended or set aside because it prevents viability.
At the moment when the first of those decisions is taken, the rural exceptions policy is dead, because shockwaves will go around the country rapidly and word will get around that this policy that has worked for 25 years; that has helped to secure housing in loads of areas for people in need; that has kept communities together; and that has given employment opportunities to people who need to work on a relatively low wage in such areas is no longer viable because people can no longer be confident that a section 106 agreement will bite and will remain in force. That is the terrible consequence of the Bill.
Amendment 4 is very modest. The Minister knows that its purpose is very limited. It is restricted to excepting four circumstances from the general impact of clause 6. It would exclude developments in national parks, in areas of outstanding natural beauty and in rural areas where the exceptions policy applies, as defined by section 157 of the Housing Act 1985. As a result of my discussion with the Minister, I have added a fourth circumstance: developments approved subject to neighbourhood development orders. In the course of our conversation, it became clear that some communities that are considering neighbourhood plans may well give consent to a development on the basis that it is affordable and would not want that to be subverted by the viability test in clause 6.
My amendments are tightly defined and would safeguard a policy that has been hugely successful and that is subscribed to by parties across the House. If they are accepted, there will be a huge sigh of relief in many rural communities that are rightly concerned that the Bill will subvert something that is of value to them and to people in housing need. I hope that the Minister is persuaded by the evidence that he heard from the people I brought to see him and by the logic of the amendments, and will feel free to support them tonight.
The Government are right to be concerned about the poor volume of house building that they inherited and that has continued for the past two and a bit years. It is right that they need to facilitate more development of more or less any kind. It will, by definition, be affordable because people will now build houses only if they can see a purchaser or tenant with reasonable security.
I have difficulty with the amendments proposed by the right hon. Member for Greenwich and Woolwich (Mr Raynsford). He and I would probably agree that we need more affordable housing of all kinds in this country. The biggest shortage is probably in affordable housing for sale. A large number of people would like to own their own home. It is one of the tragedies of the current situation that people in their 20s and quite a lot of people in their 30s are no longer able to obtain a large enough mortgage to afford the prices of homes in many parts of the country. We therefore have a new generation of people who do not have the access to home ownership that previous generations have enjoyed and taken advantage of.
That has come about because of a mighty land and property price bubble, generated primarily by the mortgage excesses of the previous decade and, to a lesser extent, by the capitalisation of the subsidies that the Government tipped into the housing sector to try to keep pace with the inflationary bubble that the banking and monetary policy was creating. We are using public money to chase a bubble, which makes it very difficult to get affordable housing to people. The public money then does not go around as far as it should, because land and property prices are so high.
How are we going to break into that conundrum? The Government are trying many things. They are trying to get a freer flow of mortgage money and cash to people at cheap prices, so that they can afford more. They are also working on the supply side to try to puncture the land bubble at a sensible rate, so that all homes become more affordable.
The danger with concentrating on so-called affordable homes for rent in the public sector is that, as the right hon. Member for Greenwich and Woolwich says, there is a big lottery element to it. If one was born in the right village or has lived in the right village for long enough, one might qualify for such property, but if one has moved around too much or has lived in a different village, there is no such opportunity. The lottery element is one problem with what the right hon. Gentleman is suggesting.
The right hon. Gentleman said that affordable homes would always be available, but of course they will not, because they will mainly be lived in by the people who first get them. Those people might decide to live in them for 20, 30, 40 or 50 years, so they will not be available to anybody else because they will be providing family accommodation to those people. We might say that that is fine, because that is the purpose of such homes, but they cannot both fulfil the intended role for the family who are lucky enough to get them and be available to a family that does not have them.
That leads to a distributional problem, because if somebody who takes on a heavily subsidised affordable rented house becomes very successful, we rightly do not tell them that they have to leave. That means that someone quite rich and successful can be living in a heavily subsidised house, which does not seem fair. It is better to move to a system of subsidising people rather than properties, by giving them income support and the means to achieve what they need—a house to buy, a flat to rent or whatever. It is subsidising property that has got us into all these awful arguments, and it is sending the wrong signals and drying up the market in all sorts of ways. There are not enough affordable properties, and an awful lot of developers are being put off.
I hope that the Minister will build on the ideas that are currently in circulation to allow some development to take place, and that he will not allow previous plans from better financial times to prevent that development. I hope he will consider the two important points that I have made—that it is surely better to subsidise people in need than particular homes, which can lead to the maldistribution of results both geographically and by individual; and that it is surely better to work on the land market, because it must be our ultimate aim to have a land market at prices that people can afford. Thanks to the mortgage and subsidy boom of the previous decade we are a long way from that, with the result that many of our constituents cannot access the housing that they need and would like.
I wish to speak to amendments 45 to 48. Clause 6 greatly exercised us in Committee because of the threat that it presents to the future supply of affordable housing delivered through the application of section 106 agreements. No evidence has been provided in Committee or elsewhere of the necessity of the clause or of why section 106 agreements, as they relate to affordable housing, should be singled out for such treatment. Ministers and other Government Members seemed blasé about what the clause could mean for the development of housing, and particularly about the need to create communities that are both balanced and mixed.
I want to make it clear from the outset that we dislike clause 6 very much indeed, and that in tabling our amendments we have sought to curtail its worst excesses. The Minister was not able to provide an evidence base for it, a point noted by many witnesses, such as the National Housing Federation, which stated that
“no evidence has been provided to suggest that Section 106 generally, and its affordable housing component specifically, are routinely stalling developments.”
The Minister has not explained why the clause is necessary given that local authorities are already renegotiating section 106 agreements. The Local Government Association has emphasised that point, and as I have already pointed out to the Minister, the LGA is currently—I stress that word to my hon. Friends—under the control of the Conservative party. It stated that it believed the whole of clause 6 to be
“unnecessary because councils are already responding to changed economic circumstances by renegotiating Section 106…agreements voluntarily.”
Case studies exist from a range of councils, including Cheshire West and Chester, Exeter and Haringey. Given the relatively short time available I will not go into them in much detail, but it is worth pointing out that Cheshire West and Chester council has already renegotiated the section 106 agreement for Winnington urban village, and that Exeter city council has done the same for a series of new developments. There are a lot of examples of that across the country, and I am happy to pass the information on to the Minister if necessary.
Does the hon. Lady accept that there is a problem with the current system? My local authority is run by the Labour party and has done a deal with the biggest developer on the estate near the Elephant and Castle, reducing the agreed planning percentage of affordable housing from 35% to 25%. When I asked, on behalf of those I represent, to see the paperwork justifying the viability of that, the council and the developer said no.
The right hon. Gentleman makes an interesting point, and I hope that he will persuade Ministers to accept our amendment 44, on how viability is measured. It would require more precise guidance to be given to local authorities of whatever political shade so that they know how they should assess viability. Voluntary agreements, which usually mean negotiating section 106 requirements downwards, are occurring across the country, so we and local councils need a better understanding of what is meant by viability in that context.
We know from the evidence provided by the LGA that on average councils are willing to accept a level of affordable housing about a third lower than the amount set in their local plan. We also know that all but 2% of councils have said that they would be willing to renegotiate section 106 agreements. There is therefore a big question about the need to include clause 6 at all.
It may help the House to understand the full nature of what is wrong with the clause if I briefly go through each amendment and its purpose. Amendment 45 would require a local authority to establish first of all that it is the application of a section 106 housing agreement that is making a development unviable. As we pointed out in Committee, such an amendment would place a sensible requirement on local authorities to establish that it is the section 106 agreement for affordable housing that means that a development cannot go ahead as planned. It would also allow other types of obligation, such as highways contributions, to be put forward to the local authority for renegotiation as part of current section 106 arrangements. Developers can already ask a local authority for a renegotiation of section 106 agreements, so we simply cannot understand why the Government would not want to accept such a basic, common-sense amendment.
The LGA has continued to press that point, stating that it does not understand why the clause addresses only affordable housing when section 106 agreements also fund other forms of infrastructure. It has asked why social housing is deemed dispensable, especially since the current lack of funding has had a particular impact on the delivery of affordable housing, which is greatly needed.
After the May 2010 election, the Government cut the budget for new affordable homes by 60%. Labour invested £8.4 billion in the three years between 2008 and 2011, whereas the current Government will invest just over half of that amount in the four years between 2011 and 2015. At the same time, funding for existing affordable homes has fallen. As a consequence, shockingly, 37% of affordable homes do not meet the decent homes standard. I say to Ministers in passing that when we discussed the matter in Committee, no mention was made of the huge amount of money that went into upholding that standard under the previous Government. Of course, that kept a number of affordable houses in occupation.
We know that private rents are soaring. They hit a record high over the summer and are even higher at the moment. The number of homelessness acceptances is increasing, and over the past year rough sleeping has risen by about 23%. Affordable housing is therefore more necessary than ever, which is why the clause is so dangerous.
The Minister should note that the Local Government Association supports amendment 44. It asks the Minister to set out in regulations the criteria by which viability is to be assessed, and to consult relevant organisations before doing so—the issue raised by the right hon. Member for Bermondsey and Old Southwark (Simon Hughes). The LGA states that the clause encourages have-a-go behaviour for developers, because it offers no reason for them not to try to seek a reduction in their affordable housing obligations from the Planning Inspectorate. The LGA has said that the clause could delay house building and economic recovery as developers wait for the new regime to be put in place, while placing additional resources centrally with the inspectorate, rather than properly resourcing local planning authorities.
Amendment 44 proposes that the Secretary of State sets out in regulations, on which there has been consultation, the criteria for assessing economic viability. The determination of economic viability and the ability of developers to use non-viability as a means of renegotiating section 106 agreements for affordable housing is central to the clause, yet at no stage has the Secretary of State thought it necessary or reasonable to set out clearly to the members of the Committee, the House, relevant organisations and agencies or developers how viability is to be determined. That is simply not acceptable; greater transparency is necessary. Indeed, on this amendment the National Organisation of Residents Associations asked the Minister what I think is a fair question: who decides what is an appropriate profit margin and how will it be assessed? The association made the relevant point that it could be a moving feast.
In Committee, the Minister said:
“Of course it is important that local authorities understand how viability will be measured and what criteria will be used. The guidance will be published in due course.”––[Official Report, Growth and Infrastructure Public Bill Committee, 27 November 2012; c. 295.]
More guidance! I thought the Government said that they were seeking to reduce guidance, yet we find, again and again during consideration of the Bill, that not only do we have consultation papers coming out of our ears, but we will have a lot more guidance to deal with too. We need to know when the guidance will be published and whether the Minister is discussing the matter with the Royal Institution of Chartered Surveyors, which, I understand, has already produced some draft guidance.
Amendment 46 would require the Government to use the £300 million they say they have allocated for affordable housing—I am concerned it may have been allocated a number of times already—to be used to pay developers to make sites viable. Labour Members are desperately concerned that the removal of affordable housing from development sites will lead to a lack of balance and a lack of mix in our communities. That is why we think it is better for the Government’s money to be used for mixed schemes, which are already planned and deliverable, rather than to stop them and put the money somewhere else. We feel strongly about this and at the appropriate time will press the amendment to a Division.
What the Minister said in Committee is interesting, because he seemed to acknowledge my point about the need to develop balanced communities:
“One reason why we all want to retain the rather clumsy 106 system is that there does not seem to be another way of achieving mixed communities whereby new developments of private housing also include affordable housing. We are genuinely trying to make this work.”––[Official Report, Growth and Infrastructure Public Bill Committee, 27 November 2012; c. 289.]
It therefore seems strange that, having acknowledged the problem in Committee, the Government have come forward with no proposals to address it on Report. The Town and Country Planning Association highlighted the issue, drawing attention to the fact that
“The effect of the reforms to Section 106 agreements will be to reduce the quantum of land for affordable housing and risks increased social polarisation on particular sites.”
How will the Minister ensure that mixed sites will continue if a developer asks for the section l06 agreements on affordable housing to be removed?
Amendment 47 was also the subject of some discussion in Committee, not least because the structure of clause 6 allows only for a situation in which land values are falling. The amendment addresses the situation where development has been stalled for more than one year and land value has risen. It allows for the local authority to determine a new requirement, modify a requirement, or agree to review it after a given period.
The Government do not seem to have contemplated a situation in which land values are rising. As the Bill is supposed to contain measures that support growth, that is extremely worrying. Clearly, the Government have no more faith in the ability of the Bill to deliver growth than we do. The amendment would allow for the renegotiation of section 106 agreements for housing to be made where land values have increased and development on a renegotiated agreement downwards has not been delivered within one year. The Minister considered the one-year period to be too short. Perhaps he will be able to tell the House today what sort of time frame he would consider.
Amendment 48 is extremely important. If a developer sought to persuade the Secretary of State that a development was not viable because of the application of a section 106 agreement for affordable housing and that it should therefore be removed, the amendment would ensure that the land remains protected for use by social landlords, or by the local authority if possible. That would protect the development of mixed communities and ensure that social landlords are not denied building opportunities through of the absence of land—a point made to the Minister by a number of housing associations. The Minister said that for social housing landlords
“land is often the thing they find hardest to come by, particularly land in a larger development, which is necessary to create a mixed community.”––[Official Report, Growth and Infrastructure Public Bill Committee, 27 November 2012; c. 306.]
He also said that more guidance will be published. I finish on this point and ask him again: when will this new guidance be published?
I will be brief. I want to make a couple of comments on clause 6 and affordable housing, and to follow on from the comments made by the hon. Member for City of Durham (Roberta Blackman-Woods) on her amendments.
I have concerns about the protection of affordable housing, both as it is traditionally defined—social rents, council rents or target rents—and as it may be defined now or in the future, which is at a higher percentage of market rents. I have raised this personally with the Minister—he has been very helpful—and the Under-Secretary of State for Communities and Local Government, my right hon. Friend the Member for Bath (Mr Foster). I would be grateful if the Minister addresses three questions.
First, how can I be assured that my constituents, local councillors and I, as the MP, will be able to see any deal that is done between our local council and the developer, and be able to ensure that the argument about viability is justified? To be blunt, I do not often believe developers when they say, “The figures don’t stack up.” I have reasons for not believing them. On the south bank, for example, developers got out of an obligation with the local authority on the basis that the figures did not stack up, but, when the properties were sold, the sale price was much higher than the likely sale price they put down. Clearly, then, their profit was greater and they could have afforded to build many more affordable homes. How can my hon. Friend the Minister assure me that we can know publicly what is economically viable?
Secondly, how can we guarantee input into the discussions about the guidance, about which the Minister has spoken and written to me, to ensure that it is effective? Bills are often outline structures implemented by secondary legislation and guidance, so I would like reassurance about the effectiveness of guidance in ensuring viability—accurately defined—and transparency and a common way of assessing it that applies all over England. It is no good having a viability argument in Southwark that is different from one in the north-east; we need a common formula that developers and councils have to follow.
My final question relates to a point made, perfectly properly, by the hon. Lady. How can we provide for the deliverability of affordable housing to go up and down? If the market drops, I could understand developers saying, “We can’t deliver,” although they would need to explain their case publicly. But if, as with the case on the south bank, the market goes up and the money to be made by the developer is greater, the community, represented by the local authority, needs to be able to say, “We want some money back. We want an additional affordable housing component.”
I hope that the Minister will put on the record some of what he has written and spoken to me about and what I have discussed with the Under-Secretary, my right hon. Friend the Member for Bath. I also hope he can reassure us that in the remaining work on the Bill—before it becomes law and in subsequent secondary legislation and guidance—the House can have an input into what is drafted and confidence that we will not lose affordable housing because developers that can afford to deliver on that simply say that they cannot.
I want to raise a number of points on which I hope the Minister can provide the reassurance that, in previous debates in the Chamber and before the Communities and Local Government Committee, he has not provided.
First, where is the evidence of a problem? The Homes and Communities Agency wrote to me to say that it had had no difficulties with section 106 agreements holding up any of its schemes. The volume house builders, to which I presume the Minister talks—I have been at meetings with them—say that the problem is not the section 106 agreements or the planning system, but getting customers who have access to finance and the confidence to spend it walking through their doors wanting to buy their homes.
The part of the industry most in difficulty comprises the small builders; the volume house builders and larger companies have simply reduced how much they are building. The small builders build on small sites which, by their very nature, do not have section 106 agreements attached to them, yet it is those schemes that have largely stopped across the country, again because of a lack of customers and the fact that banks, by and large, have withdrawn finance from that section of the industry. In that area, there has been almost no growth at all; in fact, the industry is now at a standstill. Once again, that is not due to section 106 agreements.
The hon. Gentleman is right that the main problem is the lack of effective demand because of the banking and mortgage collapse, but does he not see that, because of that, there is little or no profit in these prospective developments and that that is why they cannot afford the 106 agreement-type levels common before the bust?
I put to the right hon. Gentleman a point that has already been made very effectively: why, then, are the Government targeting only the social and affordable housing element of section 106 agreements? What about the rest of the obligations on developers? Do they not cause a problem too? In an earlier debate—I do not know whether the right hon. Gentleman was present—when challenged by his colleagues behind him about the need to ensure proper infrastructure, the Minister talked about the need for the community infrastructure levy to provide the resources to ensure that that infrastructure was provided. If developers have a problem with viability, why is he championing the community infrastructure levy and 106 agreements that are currently providing infrastructure for non-housing elements while targeting the housing element of 106 agreements? Why is that necessary? Again, we have had no answer from him.
On the housing element, I want to return to a point that we discussed in the Select Committee the other day and which my hon. Friend the Member for City of Durham (Roberta Blackman-Woods) just made very strongly. I refer to the crucial issue of mixed housing developments. I would have thought that there would be cross-Chamber support for the idea of mixed housing developments. We do not want people in owner-occupied houses in one place and a smaller number of rented homes completely segregated on a different site. We need mixed schemes where everyone, irrespective of their tenure, can live together side by side. I thought that was the Government’s policy.
We had an interesting discussion about that in the Select Committee. We asked the Minister why, if £300 million was to be made available to provide additional rented homes in order to compensate for the ones lost under section 106 agreements, those properties could not be built on the same sites as the schemes in question in order to increase their viability. As I understand it, that is precisely what my hon. Friend’s amendment 46 would do, so will the Minister respond favourably to it? It would simply put into the Bill the idea that he seemed to welcome in the Select Committee the other day. I look forward to his response.
I turn to amendment 44, which was also tabled by my hon. Friend. The right hon. Member for Bermondsey and Old Southwark (Simon Hughes) made the point about viability and whether we can trust developers when they say that a scheme is not viable. By what criteria will they and the Secretary of State be judged if a scheme is changed and fewer affordable houses are built? The Minister must accept that 106 agreements are not often backroom deals made in isolation between council officials and developers; they are often out there and scrutinised not merely by councillors, but by the public affected by them.
Communities want to know what will be built in their areas and whether rented homes will be available for people who cannot afford to buy. They will be very suspicious if, without such criteria in the Bill, the Secretary of State seems to be doing a deal behind the scenes—whether or not it is called the Planning Inspectorate—which results in the withdrawal of the affordable homes that they thought were being built, and to which they and their families would have access, and different amounts of affordable housing, if any, being agreed for the site. That is why it is important that the Minister states upfront the criteria that will be used to change the affordable housing component that communities will assume will be negotiated for their areas.
Finally, the lack of rigorous time scales in the proposals is worrying. My hon. Friend the Member for City of Durham mentioned the possibility of revisiting the issue after one year and reinstating higher levels of affordable housing for any scheme. That is a really important point, because the worry that some people have about the proposal is that developers will simply say that schemes are not viable; renegotiate them so that less affordable housing has to be provided; and sit on the land and wait till times become more propitious—when they can sell the houses for more, sell more houses and provide fewer for rent. In the meantime nothing will happen. In other words, instead of a stimulus to growth, the proposals could defer development and increase the profitability of the schemes so that fewer affordable or rented houses are produced. The Minister needs to address that worry and include some proper time periods, as my hon. Friend the Member for City of Durham has suggested.
Everybody is keen for me to explain things and reassure them, but they have not given me a great amount of time in which to do so. I hope you will understand, Madam Deputy Speaker, if I canter through my remarks pretty quickly.
I am a simple soul and do not have a lot of truck with ideology. I want to build more houses now, and I want the absolute certainty that they will go up, rather than a vague, tenuous hope of even more houses at a possible future date. Our discussions in Committee and this evening have persuaded me even more of the merit of this clause, and I am redoubled in my enthusiasm.
I am sorry, but I will not give way because many hon. Members have asked me for explanations and assurances. I am entirely convinced of the merit of this clause, but in Committee I heard good arguments from Members across the House about ways in which the legislation might be applied that would not produce more houses soon, or could threaten that possibility. I will address two of those arguments, which I hope will offer some reassurance to many hon. Members.
My right hon. Friend the Member for Hazel Grove (Andrew Stunell) and the right hon. Member for Greenwich and Woolwich (Mr Raynsford) raised the issue of rural exception sites. I understand that the likelihood of more land being brought forward in the future to supply affordable housing in key rural exception sites might diminish if the clause were to be applied to those genuinely exceptional schemes. I am grateful to the right hon. Member for Greenwich and Woolwich for organising a meeting with the housing association and the national park authority, and to my right hon. Friend the Member for Hazel Grove for attending it. I have been persuaded by the principle of their argument, but the precise way that the right hon. Gentleman’s amendment takes account of the issue is not necessarily right and I hope I can persuade him not to press the amendment to a vote. I am currently looking at proposals that will be brought forward in the other place to achieve a carve-out for rural exception sites from this provision.
I have also been persuaded by some of the arguments about developers achieving a more favourable affordable housing agreement and then sitting on it. That is why, unprompted, the Government have clarified that any affordable housing agreement renegotiated by the Planning Inspectorate will survive for three years but return to its previous level at the end of that period. If the developer has not built out on the basis of the new, lower, affordable housing agreement, the agreement will return to the previous higher level and they will have to continue to build it out at that level.
I was coming to that. Currently, I am glad to say, the Planning Inspectorate is required to consider in its decision only evidence that is published or available publicly. It is not allowed to take into account anything that it is given on an entirely confidential basis. We intend to apply that principle to its decisions on viability under this clause, and through guidance we will urge local authorities as strongly as possible to adopt the same policy. Currently there is not quite the same expectation, but being a proper localist I am not in the business of compelling local authorities to do such things. However, I reassure my right hon. Friend that we will be nudging them hard.
The further financial support announced at the same time as measures in the Bill—£300 million of subsidy and a further £10 billion of guarantees—was also raised. As I explained in Committee—it is important to repeat it in the House—the subsidy is awarded to particular providers of affordable housing, not particular schemes, and Members across the House will want provision of that subsidy and its allocation to different providers to be based on value for money. We all want more, rather than fewer, houses for the amount of money available. We cannot allocate money to solve the problem of a particular site, because that would not meet the value-for-money test, as some sites will represent worse value for money than others. It is, therefore, right to retain the discretion to give the subsidy where value for money is greatest, but there is nothing to prevent providers who have sites that are affected by such renegotiation from coming forward with proposals for that subsidy and guarantee. If they can make the case that a site represents a good place to invest the Government’s money, there is every chance they will secure some of that subsidy.
What we are trying to achieve is simple. Many local authorities, of all political stripes, have understood that some agreements were based on market values that no longer pertain, or on market conditions that are no longer in place, and are therefore impossible for any developer to build out. Those authorities—and I congratulate them on it—have voluntarily renegotiated the affordable housing elements of their section 106 agreements, and sometimes other elements, to unlock activity and house building now. The Government would like to see every local authority do that willingly, off its own bat, without the application of this clause, and transparently so that the local population can see why it has taken those decisions.
A common thread running through this Bill is that we want many of its measures never to be needed because local authorities have acted first. That is true of clause 1 and equally true of this clause. We want local authorities to take responsibility, and instead of fetishising an agreement that sets out a vague target for affordable homes that might be built, we want them to do whatever it takes, pragmatically and practically, to ensure that homes are built. I have accepted many suggestions from hon. Members on all sides of the House, and I have learned a great deal from those more experienced than me about such things as rural exception sites and the way viability is assessed.
I hope I have persuaded hon. Members that the Government are genuinely trying to make the legislation work to produce more houses now, while retaining the important principle of mixed communities, emphasised by Members across the House. We want mixed communities to remain a key theme; we do not want gated communities. That is why the new section 106 affordable housing agreements will return to their previous level after three years if they have not been built out fully. The Government hope and would prefer local authorities, rather than the Planning Inspectorate, to renegotiate affordable housing agreements. The amendment is a last resort to prevent a very few pig-headed local authorities from doing what is in the interests of their own people and ensuring that more houses get built quickly, rather than waiting for some never-never land where that unrealistic agreement is finally translated into bricks, mortar and roofs over people’s heads.
This debate, and those in Committee and on Second Reading, have shown that the Government—two parties with very different philosophies—believe in practical measures to get things done and make people’s lives better. All too often the Labour party prefers postures, statements and wild aspirations with absolutely no explanation about how it will deliver them. On that basis, I hope that the right hon. Member for Greenwich and Woolwich will withdraw his well-intentioned and sensible amendment with a view to an alternative being brought forward in the other place. I urge the House to resist the amendments tabled by the hon. Member for City of Durham and her hon. Friends.
I am slightly disappointed that the Minister cannot accept the wording of my amendments. I took some care with the wording in Committee—indeed, one of my amendments was treated as poetic, which was a rather attractive description. On this occasion, despite the affront to my amour propre and the fact that the Minister has not accepted the wording, I accept his good intentions and the fact that he has agreed for the Government to introduce amendments in another place. I therefore beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Amendment proposed: 46, page 6, line 40, at end insert
(e) request that the requirement is to be met in part, or in full, by central government funding allocated for the delivery of affordable homes.’.—(Roberta Blackman-Woods.)
Electronic communications code: the need to promote growth
Amendment made: 6, page 11, line 31, at end insert—
‘( ) At the end of section 14 of the National Parks (Scotland) at 2000 (asp 10) (public authorities’ duty to have regard to National Park Plans when exercising functions in relation to National Parks), the existing text of which becomes subsection (1), insert—
“(2) Subsection (1) does not apply to the exercise by the Secretary of State of the power to make regulations under section 109 of the Communications Act 2003 (conditions and restrictions on application of electronic communications code) if—
(a) the power is exercised before 6 April 2018, and
(b) the resulting regulations are expressed to cease to have effect (other than for transitional purposes) before that date”’.—(Nick Boles.)
With this it will be convenient to discuss the following:
Government amendments 22 and 23.
Amendment 60 in clause 25, page 32, line 13, leave out ‘or becomes’.
Government amendment 24.
Amendment 37, page 32, line 14, at end insert—
‘(za) the individual has been an employee of a company for at least two years.’.
Amendment 61, page 32, line 15, leave out ‘the company’ and insert ‘a majority of the employees of the company’.
Government amendment 25.
Amendment 62, page 32, line 21, after ‘£2,000’, insert—
‘if the individual has been an employee of the company for less than three years, increased by an additional £2,000 for every additional year for which the individual has been an employee of the company’.
Amendment 40, page 32, line 23, at end insert—
‘(1A) The Secretary of State shall make by statutory instrument such regulations as are necessary to safeguard an employee who declines to enter into an agreement under subsection (1) from any consequential detriment.
(1B) The Secretary of State may not make any regulations under subsection (1A) unless a draft of the statutory instrument containing the regulations has been laid before, and approved by, a resolution of each House of Parliament.’.
Amendment 41, page 32, line 23, at end insert—
‘(1C) The Secretary of State shall issue such guidance as is necessary to safeguard any person who declines to enter into an agreement under subsection (1) from any consequential reduction or withdrawal of any state benefit to which they are entitled by virtue of their current employment status.’.
Amendment 63, page 32, line 23, at end insert—
‘(1A) The Secretary of State shall provide by regulations for there to be, for every company having employee shareholders, a director who is elected by those employee shareholders.
(1B) Regulations under subsection (1A) shall be made by statutory instrument and shall not be made unless a draft has been laid before and approved by resolution of each House of Parliament.’.
Amendment 39, page 32, line 24, leave out from beginning to end of line 11 on page 33.
Government amendments 26 to 31, 64, 65, 32 and 66.
We now come to the worst clause in a bad Bill. In the words of the Christmas song, ’tis the season to be jolly, but sadly this out-of-touch Government are dampening the festive spirit with a measure that embodies the characteristics of the classic Dickens character, the miserly employer Ebenezer Scrooge, at his worst. I would never accuse the Minister of State, the right hon. Member for Sevenoaks (Michael Fallon), of being such a character, but I hope that he will prove to the House that he is not, by removing clause 25 from the Bill.
As in that Christmas tale, let us look back at the ghost of Beecroft past. It was back at the beginning of October when, much to everyone’s surprise, the Chancellor announced the Government’s intention to introduce a new employment status. A company would be able to offer an employee shares in its business in exchange for some of that individual’s rights at work. The proposal has had a quick passage since the Chancellor’s speech, in which he spoke of
“owners, workers and the taxman, all in it together. Workers of the world unite.”
I have to give it to the Chancellor; he has certainly fostered a sense of unity. He has unified outright opposition to this policy from every quarter. It has received a lukewarm response, at best, from the business community, and it has been roundly trounced by employee organisations, trade unions, business leaders and charities. Only five of the 219 consultation responses welcomed the proposals. We therefore believe that our amendment 59 is the only acceptable option, as we can see no way in which the clause could be amended to make it more palatable. I appreciate that amendments have been tabled by my hon. Friend the Member for Hayes and Harlington (John McDonnell), who is in his place, but, to be honest, he is trying valiantly to make a silk purse out of a sow’s ear.
As my right hon. Friend the Member for Leeds Central (Hilary Benn) said on Second Reading, this measure is about cash for repeal. For as little as £2,000-worth of shares, an employee would be able to give up legal rights such as their right to training, their right to unfair dismissal protections, their right to a redundancy payment—even though their shares might be valued at less than the statutory redundancy payment—and their right to flexible working, which would fly in the face of announcements made by the Department for Business, Innovation and Skills only last week.
Looking at the proposal more closely, we see that the ambiguities are numerous. It is not at all clear whether the new type of employment contract would be genuinely voluntary. In Committee, the Minister said that nothing in the Bill would make the status mandatory, but I am not sure that that clarification is good enough. Paul Callaghan from the respected legal firm Taylor Wessing has commented that
“these contracts will be optional to the extent that eating and drinking is optional.”
We know that employers will be able to offer employee-owner status to new recruits, but it is far from clear how voluntary the scheme will be in reality, or whether employees or prospective employees will be offered a real choice. People will be under undue pressure to take up a position even though they might not be able fully to appreciate the rights that they will be giving up. In truth, few with family responsibilities would want such a contract. We have consistently posed the question of whether employers would be free to decide to employ all new recruits on employee-owner contracts, meaning that individuals would have no choice but to contract out of their basic employment rights if they wanted the job. The Minister has failed to address those points.
I have also raised the fear that there would be nothing to prevent employers from threatening existing employees that they will retain their jobs only if they agree to sign a new employee-owner contract. Existing employees could therefore be pressurised into agreeing to move on to such a contract. No mention is made in the Bill of safeguards for individuals who decide not to opt to become an employee-owner, and despite our tabling constructive amendments in Committee the Government rejected them outright. I appreciate that the right hon. Member for Hazel Grove (Andrew Stunell) and the Secretary of State tabled amendments relating to this, but the reality in the workplace is much more difficult.
What about people who are claiming jobseeker’s allowance? Members will have received a letter from the Department of Work and Pensions only last month outlining the sanctions available to the Department if people refuse to take a job. It stated that the higher rate sanction would be put in place if claimants
“refuse or fail to apply for a suitable job”.
Would refusing an employee-owner-only contract constitute refusing to take a suitable job? The Minister said in Committee that that would be up to the discretion of the DWP, and that he would reflect on that discretion. That is simply deplorable. I am keen to hear what measures he will propose, having reflected on the matter, to ensure that the scheme is genuinely voluntary, as the Government insist, and that jobseeker’s allowance claimants will not be at a disadvantage, should they rightly refuse to accept a job in which they did not have full rights at work.
The Government are also unclear about the valuation of shares and the cost to the businesses themselves. How is the average employee meant assess the true value of the shares being offered?
Let me refer again to the wonderful contributions by Paul Callaghan when he gave evidence in Committee. He highlighted the significant potential costs to business of putting these proposals in place: the costs of valuing, issuing and allotting new shares in small numbers to a great number of employees. He said that small firms might not wish to dilute their share ownership in this way in any case, and might have internal restrictions preventing them from doing so. What happens when small businesses have additional investment, as often happens in the technology sector, at which these proposals are directed?
Critically, the loss of unfair dismissal rights may lead to grievances being construed as other claims. This could lead to an escalation in discrimination and whistleblowing claims, which are more time consuming, more costly to the employer and take up more tribunal time. This could be catastrophic for business.
Overall, the adverse impacts on employees, the disincentives for employers and the inconsistencies with existing legislation all tend to suggest that this has not been properly thought through, which is really bad for business. There are also issues with insolvency and when businesses run into trouble. Given that these contracts will mean employees giving up their redundancy and unfair dismissal rights in exchange for as little as £2,000 in shares, when a company needs to shed staff it will surely sack those on employee-owner contracts because the share value will be at its lowest, or, indeed, be completely worthless.
What about the hot topic of tax avoidance? The Institute for Fiscal Studies attacked the Government for condemning tax avoidance as they
“prepare…to put another billion pound lollipop on the table”.
The IFS said:
“Just as government ministers are falling over themselves to condemn such... behaviour, that same government is trumpeting a new tax policy that looks like it will foster a whole new avoidance industry.”
In the autumn statement, the cost of the policy was estimated to be rising to £1 billion. The IFS concluded:
“Much tax policy is made carefully and with extensive consultation. But it doesn’t take very many of these sorts of rushed, ill thought out and badly designed bits of policy to undermine the rest of the system.”
Let us move on to the Business Secretary. In “A Christmas Carol”, the Business Secretary is the Bob Cratchit to the Chancellor. He came out following the Government’s conference announcement to appease those in his own party who recognised how ridiculous the policy is. The Business Secretary wrote:
“This is categorically not a case of us allowing no-fault dismissal—a scheme championed by Tory donor Adrian Beecroft—by the back door and condemned by Liberal Democrats as introducing a ‘hire and fire’ system.”
The Business Secretary is absolutely right. This is not compensated no-fault dismissal by the back door; this is the ghost of Beecroft present. What we have here is a final attempt by the Chancellor not just to deliver his Beecroft-compensated, no-fault dismissal by the back door; instead, given the issues around the paper value of shares, particularly in non-quoted companies that might sack employees when business falters, it is a step even further than Beecroft. This is simply no-fault dismissal—without any compensation.
Worst of all is the second “Tory tax bombshell” of this Parliament, this time involving income tax and national insurance. The Liberal Democrats will remember the phrase, given that they coined it in 2010 in relation to VAT, which they subsequently put up. In Committee, the Minister read out the section from the autumn statement:
“The Government is also considering options to reduce income tax and National Insurance contributions…liabilities that arise when employee shareholders receive their shares, including an option to deem that employee shareholders have paid £2,000 for shares they receive. This option would mean that the first £2,000 of shares received under the new status would be free from income tax and NICs.”––[Official Report, Growth and Infrastructure Public Bill Committee, 6 December 2012; c. 490.]
This is, quite frankly, in the words of the Government “bonkers”. An employee who received as little as £4,000-worth of shares would be hit with PAYE and national insurance charge of hundreds of pounds in their first pay packet, despite having never realised the value of these shares—if, indeed, they ever have any value at all. Share plans expert Matthew Findley of Pinsent Masons has said:
“The Government’s decision to press ahead, despite widespread criticism, is not surprising given the amount of political capital originally invested in the idea…The level of opposition to the proposal is clear from the Government’s response to the consultation but little of what has been said so far is likely to improve the position. Critically, the income tax position of employee owner shares has yet to be finalised.”
This is simply not good enough.
In conclusion, we fully support employee ownership, but this policy has the potential to undermine all the good employee schemes that exist. There has been little or no proper consultation, as the Government rushed this through in eight weeks in order to produce a response and an impact assessment before we got here today.
Justin King, chief executive of Sainsbury’s, who until last week served on the Prime Minister’s business advisory group, cautioned that the policy is
“not what we should be doing”.
“What do you think the population at large will think of businesses that want to trade employment rights for money? Our agenda, if the government want to help us, should be making employing people easier and less costly.”
My hon. Friend is making a very good case. Is it not clear from what Conservative Members have said that we know exactly what this is about—it is about the complete disregard for workers’ rights by Government Members? They believe anything can be resolved by waving money at it. It is absolutely disgraceful that we even have to discuss this issue tonight. I hope the Liberal Democrats will have some of the courage that they have not shown in two and a half years so far and vote against this measure tonight.
My hon. Friend makes an incredibly strong point. If the clause had been drafted to increase employee ownership without the exchange for rights, we would have fully supported it. What the Government are doing, however, is saying to employers, “If you wish to buy out the rights of your employees, you may do so for as little as £2,000 without any regard whatever to the protection they have against unfair dismissal and redundancy.” Crucially, in response to my hon. Friend the Member for Blaydon (Mr Anderson), this flies in the face of the Government’s flexible working policies that they were trumpeting just last week. In addition, the people who will be hit worst by this policy will be those who are not able to seek advice and those who are not members of trade unions or other associations.
We Labour Members have enjoyed my hon. Friend’s Dickens metaphor. He will be aware that what Dickens disliked above all else was the Liberal party of the late 19th century, which believed in a laissez-faire economy—and the devil take the hindmost. What does my hon. Friend think Dickens would make of this Liberal Democrat party supporting such a bonkers idea?
That is a worthwhile intervention from my hon. Friend, who is an historian himself, so I could not possibly argue against the valuable points he has just made. It is extraordinary that the Liberal Democrats are bringing forward this proposal and are wholeheartedly supporting it. The Business Secretary is not here, and the Business Secretary was not here for the Third Reading or vote of his own Enterprise and Regulatory Reform Bill, in which provisions affecting the rights of workers were pushed through. If the Liberal Democrats do not see that this is Beecroft by the back door, they should have a look at some of the information being put out by the business community and others.
I was quoting Justin King a few moments ago. He said that we
“should be making employing people easier and less costly.”
That sounds very much like our national insurance holiday, which is part of Labour’s five-point plan.
I referred in my opening remarks to Ebenezer Scrooge—a cold-hearted, tight-fisted and greedy character who treated his employees appallingly. I believe that the overwhelming majority of hard-working and entrepreneurial businesses in the UK are exactly the opposite, and understand that the relationship between employers and employees in the workplace is critical for good business.
We know the Minister has no appetite to take these “shares for rights” proposals forward, and I think he knows that the Government are opening the opportunity for Scrooge-like employers. Let us remember, however, the tale of that character's redemption when he sees the error of his ways. This is a Christmas tale: the Minister and Government Members should take heed and bin the ghost of Beecroft future. They still have the chance to remove this nasty, Dickensian clause from the Bill, and I look forward to them joining us in the Lobby this evening.
I tabled amendments 40 and 41. I look forward to hearing what my right hon. Friend the Minister has to say about Government amendments 64 and 65, which go a long way towards meeting the concerns that lie behind amendment 40.
I agree with the hon. Member for Edinburgh South (Ian Murray) in one respect. When the Committee took evidence, we heard from a succession of Jonahs. Neither the TUC nor the CBI was exactly over the moon about the Government’s proposals, and, indeed, all the outside organisations that gave evidence had criticisms to make. I particularly noted the words of a senior employment lawyer, who said, in plain terms, that he would not encourage any of his clients—that is, employers—to take advantage of the measure. The CBI described it as a very small niche product. However, my amendments are intended to deal not with circumstances in which it will be a niche product, but with circumstances in which all the evidence that the Committee received turns out to have been too pessimistic about its success. If that proves to be the case, it is important that the Minister’s plainly expressed intentions are clearly met, and that no employees are forced to accept a deal that they do not consider to be suitable for them and their circumstances. Amendment 40 makes it clear that there should be no detriment to such employees.
I am happy to say that Government amendments 64 and 65 appear to cover exactly the same territory, and—as is the way with Government drafting, as opposed to Back-Bench drafting—probably more thoroughly and comprehensively than I did. I therefore do not intend to press amendment 40, although whether I do so will depend on what the Minister says about the Government amendments. I assume that they are intended to provide safeguards against two possible outcomes. Amendment 64 would prevent an employee who turned down a contract of this kind from discrimination or other disadvantages in the workplace, while amendment 65 would ensure that the dismissal of such an employee constituted an unfair dismissal in employment law. That more or less covers what I was trying to do in amendment 40.
I have not yet been able to detect a Government amendment that matches amendment 41, but, again, I look forward to hearing what the Minister has to say. My amendment is designed to deal with circumstances in which a vacancy arises in a firm that has adopted the proposed structure, and a jobcentre sends someone to the firm to apply for the job. As was pointed out by the hon. Member for Edinburgh South, the current policy of the Department for Work and Pensions is, rightly, that those who are receiving benefit and are directed to vacant posts have a duty to consider them, and, if they constitute reasonable offers of employment, to accept them. If they do not do so, their benefits will be suspended or withdrawn. My amendment proposes that if people refuse jobs because they are offered an employee-owner contract, that will not be grounds for the suspension of their benefits and for them to be put at a disadvantage. If they do not have some protection of that sort, it will be impossible for the Government to fulfil their clear commitment, which was confirmed by the Minister in Committee, that no one would be forced into such a relationship. Again, I look forward to hearing from the Minister, and, having done so, I may or may not choose to press amendment 41.
I hope it is clear to the House that my central objection is not to a new or alternative type of employment contract. I have no problem with that. The problem will arise if the power relationship between employer and employee is so out of balance that the employee does not have the discretion and the free will to refuse and to do something else instead. What I wanted to do, and what my Liberal Democrat colleagues wanted me to do, was ensure that neither those currently in employment nor those prospectively in employment would suffer any detriment in relation to the state benefits system. I look forward to hearing the Minister’s response.
I heard what my hon. Friend the Member for Edinburgh South (Ian Murray) said about the inability to amend this part of the Bill, and I sympathise with his view, but I thought that it would be useful for us to test whether the Government’s intention was to adopt a genuine approach to developing the concept of employee ownership or whether this was merely an attack on employment rights. I thought that it would be useful to set out how an employee ownership scheme could be introduced, and that if the Government’s intention was indeed to develop the concept of employee ownership they would support my amendments, or at least commit themselves to tabling amendments to the same effect.
The argument about employee ownership relates to economic democracy. I believe that we should socialise our economy. I believe that individual workers at every level should have control over their own working lives, and that that means democratic control of the firm, the region and the nation. Over the years, the House has debated a variety of methods of bringing that about. We have discussed public ownership, and nationalisation as part of that; co-operation; mutualisation, by which I mean true mutualisation and not the alternative description of privatisation employed by the present Government; and worker ownership models, which have included the extension of employee ownership. A range of models have been discussed over the years, including the Scandinavian model—in which share entitlements are given to the workers and then put in trust, gradually amounting to control of the firm itself—and the individual employee ownership model proposed in the Nuttall review.
Will my hon. Friend confirm that none of the interesting employee ownership and co-operative models that exist throughout the world depend on individual employees giving up their statutory rights to redundancy, maternity pay or access to an employment tribunal?
Quite the reverse, and as employee ownership has developed in this country, all the arguments have been about the enhancement rather than the withdrawal of rights. However, that can succeed only on the basis of an open, transparent commitment to a partnership in the company concerned. The purpose of the amendments is to offer an alternative to the Government if they are serious about employee ownership.
As I was saying, my proposals are very much in line with the Nuttall review, published in July this year. I propose that when someone has worked for a company for two years, which is the normal qualifying period, and the majority of the other employees agree, that person can become an employee owner and can be awarded the first £2,000-worth of shares. As in normal employee ownership schemes, the longevity of the employee’s commitment to the company is rewarded with the further allocation of shares, usually on an annual basis.
I suggested there should be a further £2,000-worth of shares for every year of service. I am unsure about the nature of the shares that will be offered, but employee ownership shares are normally full voting rights shares; that would be the normal way of developing an overall co-operative. My amendments also suggest employee owners should have the right to elect a director employee owner on to the board, to represent the employee owners. That, too, is in accordance with the standard model of employee ownership. My amendments would also ensure there is no relationship between the award of shares and any reduction of employment rights; I have deleted the measures relating to the exchange of employee rights for the award of shares.
The model my amendments propose is the standard model for an employee ownership scheme, as called for in a wide range of consultations over the years, and recently by the Employee Ownership Association. If the Government do not accept this model, I will fear that their proposals are, in fact, designed to attack and undermine employment rights. In fact, I am now convinced that that is the case, on the basis of the Government’s responses to the consultation. The time scale for the consultation was extraordinary. The Government proposal was announced on 8 October, and the consultation started on 18 October and was completed on 9 November. That is one of the fastest consultations for a major proposal under any Government in recent times, apart from for emergency legislation.
That is an important point. Furthermore, not only did the consultation response come in on the morning we were debating these measures in Committee, but the Government completely ignored it, because the only amendment they committed to introduce was to change the name from employee owners to employee shareholders.
The fact that there was just one cosmetic change shows that the consultation was ignored.
In support of my amendments, it is worth putting on record exactly what the consultation proposed. It found that the majority view was that no one should be asked to exchange their employment rights for shares. The Employee Ownership Association forged an alliance with the Fawcett Society, Family Lives, the Chartered Institute of Personnel and Development, the Family and Parenting Institute and Working Families. They described the consultation response as anti-democratic, rushed and poor quality, even containing a series of factual errors.
The Office for Budget Responsibility found that the Government proposal is more likely to be a cost for the Exchequer than a gain for the overall economy. The OBR said it will cost £1 billion by 2017-18. Others have described it as not particularly welcome. Businesses have certainly not welcomed it. Out of 184 responses to the Department for Business, Innovation and Skills, only two individuals and one organisation voiced support, saying they may take it up. There is hardly a clamour for these measures, therefore.
In none of the evidence submitted in the consultation did anyone describe the giving up of employment rights in this way as being likely to remove barriers to significant increases in employment. The Government’s reform flies in the face of the Nuttall review, too. We thought that there was to be a lengthy period of negotiation and discussion, and the Government would then come forward with proposals for the extension of employee share ownership, which would, in fact, probably receive cross-party support.
My hon. Friend mentions the astonishing fact that the OBR says this reform will cost money at a time when, as the Government keep telling us, money is so very tight. Is my hon. Friend surprised that this bonkers reform will cost money? The reform is based on the work of Mr Beecroft, who admitted under examination that there was no evidence whatever to support his proposals, and that they were mainly based on anecdotes and personal experiences.
I am trying to find a Dickensian analogy; perhaps it should be great expectations met by hard times.
I was interested in the TUC response which was supplied to Members. It addressed the potential for this reform to be used for tax-avoidance purposes, through people switching their share schemes and entering into new ones. It appears, therefore, that although there will be no gain in terms of increased employment, this reform will be used as yet another tax dodge.
These proposals also threaten flexible working. As the Fawcett Society says, they will discriminate in particular against women and those who are carers. I thought Members across the House supported flexible working, but it is now suddenly seen as a burden that is to be negotiated away and lifted off businesses. The Equality and Human Rights Commission also expressed concerns about the potential of the Government’s proposals to allow discriminatory behaviour.
My overall assessment is therefore that these proposals are not intended to promote employee ownership at all; rather, they are an attack on employment rights. If the Government were serious about promoting employee ownership, they would either accept my amendments or work them up into a more definitive scheme. I am convinced we would then achieve cross-House consensus in favour of such a scheme. There must not be any link to an exchange of employment rights, however. As I have said, far from serving to promote employment and therefore be a benefit to the economy, it appears these reforms will be an expensive tax avoidance scheme, with up to £1 billion lost to the Exchequer.
I urge the Government to think again and to bring forward proper proposals. As on all such occasions, I give them this warning: legislate in haste and regret at leisure. That is what will occur as a result of these proposals. I am extremely disappointed that the debate has been dragged into the gutter, with attacks on working people. Over the years, so many of us have advocated democratising companies, the benefits of worker involvement in companies and the benefits of extending ownership in companies so people have greater control of their working lives. The Government have demeaned themselves by tacking such proposals on to this Bill in this way. Fresh thought is required if we seriously want to legislate for employee ownership schemes.
My first question is: where are all the Members who are supposed to be supporting this Bill?
I believe in freedom of choice. If an individual wishes to work for a company on a contract such as that which is proposed, they should be able to do so. That will not be the case in the big industries. Rolls-Royce and Jaguar Land Rover are not going to get involved. This scheme is for small niche companies in the high-risk sectors, such as high-tech firms and website designers, which employ recent graduates who want to get involved in such firms because they hope they will become a second Google. These companies are the gamblers that grow and create jobs in the future. I cannot understand why this Parliament should stand in the way of these people and say, “I’m sorry, but you can’t do that, even if you wish to do so.”
I think back to the 1960s when I was 24 and I had just come out of my apprenticeship. I went for a job as a contract draughtsman. I was offered two alternatives by the company. It was a good company, and it said I could have all the schemes it had, such as holiday pay and a contract for 44 hours of work a week—those were the hours we used to work in those days—and I would have a fixed rate. Alternatively, the company said I could have none of those schemes and have four shillings an hour more than everybody else was getting. I was keen to earn extra money, because I wanted to save up and put a deposit down on a house, so I decided not to have any of the conditions laid down by the company. I decided, on my own back, as I had the freedom to do so, to take extra money for working as many hours as I wished while having no contractual employment. I did that for two years and managed to raise enough money to put down a deposit on a house. That was my choice and it was the company’s choice to offer it to me. Other people worked there who wished to carry on with the conditions they had, but other young guys like me wanted to raise as much money as they could to put down deposits on houses, buy new cars and so on, and they went ahead and did it. They were free to do it—there was no pressure.
The hon. Gentleman’s central argument is that the proposed scheme is voluntary, but my problem, in addition to all the comments made by my hon. Friend the Member for Edinburgh South (Ian Murray), is that the Government have singularly failed to give any guarantee that a prospective employee in receipt of JSA who does not wish to take up such employment will not be penalised for not wishing to take a job without basic fundamental rights. That is, in fairness, the point that the right hon. Member for Hazel Grove (Andrew Stunell) has made: we have received no guarantees whatsoever. How can the hon. Member for Burnley (Gordon Birtwistle) say that this is voluntarily, if people could face such sanctions?
I thank the shadow Secretary of State for his observation. My name is on the amendments tabled by my right hon. Friend the Member for Hazel Grove (Andrew Stunell) and I am waiting for the Minister to answer the questions they raise. I am sure he will give us some advice. If a the jobcentre advertisement for a job makes it clear that it involves giving away rights in return for shares, the person going for it will know that before they apply and will be completely open to the idea. If the jobcentre does not advertise those conditions, and the applicant is told about them only when he goes in for interview, my concern is whether he will still get his benefits when he tells the job centre the conditions he has been offered. I hope that the Minister will advise me that that applicant will still get their benefits, and if he does not I shall be extremely concerned and will have to consider which way to go. However, I am sure that the queries raised by our amendments will be answered.
The hon. Gentleman does not appear to be aware that even if someone refuses to go for an interview for a job because they have read the details and seen that they would have to give up their rights, they could be sanctioned—that is, they could lose benefit—because of that.
The hon. Lady will be anxious to hear the Minister’s answer to that question, which our amendments put to him. We have tabled the amendments to tease the answers out of him—if she had proposed an amendment, she would have received an answer to her question, but she has obviously merely turned up today to try to stir things up.
Amendment 41 will, I hope, clear this question up. I hope the Minister can give us an answer, and if he does not we will have to ask other questions at another time. My main concern is about an applicant who is sent for a job by the jobcentre and finds out only when they arrive that it is a share-ownership job. Will their jobseeker’s allowance be affected if they refuse it? I am reasonably confident that it will not.
This will only happen in small niche companies. I do not think that we have the right to stand in the way of people who wish to get involved in such businesses, to get on, to take a gamble or to be involved in a company that will grow, so that their £2,000-worth of shares grows with it. There might well be a second Google somewhere, but I do not want to tell people that although they might have wanted to make those decisions, I did not want to give them the opportunity. That is why I support these proposals.
I am very grateful to the hon. Gentleman for giving way, as he is being incredibly generous in doing so. Does he not accept that in his example from the 1960s—50 years ago—taking extra money in return for rights was completely voluntary? He could have refused that, but many of the examples we are hearing involve cases that will not be voluntary, as people might be coerced to give up their rights for worthless shares.
I accept that in my case it was voluntary. I could have taken holiday pay, but I would rather have had the four shillings an hour more, which is very little today but was a lot of money in those days, to save up. I am reasonably confident that what I will hear from the Minister will lead me to believe that the proposal is voluntary enough. I am sure that it is voluntary and what I have read in the Bill does not suggest that people will be forced. I think the proposal is okay, but it is a small idea for niche businesses. Major companies will not be offering the option, only small companies, and we do not have the right to stand in the way of people’s freedom to take it up if they wish.
I want to speak about this group of amendments because in recent weeks, like many other hon. Members in the Chamber, I have been contacted by a number of my constituents who are concerned about the Bill and would rather see it rejected. In the past week, I received a constant flow of correspondence specifically on clause 25 and not one of those people had anything good to say about it.
My hon. Friend the Member for Hayes and Harlington (John McDonnell) made a good case for his amendments and the coalition partners, the right hon. Member for Hazel Grove (Andrew Stunell) and the hon. Member for Burnley (Gordon Birtwistle), have tried to ease the severity of the clause with their amendments. As my constituents have identified, however, the clause has no saving graces. The recent consultation showed that as few as five out of 200 businesses say that they would want to use such a scheme, but the Government want to see it rolled out. They want employers to take it up, as they would get a far greater pool of employees to choose from, and it is hoped that potential employees would have a better opportunity of finding employment—but at what cost? If someone has to forfeit their rights on unfair dismissal and to redundancy pay, that cannot be a price worth paying.
My constituents have asked time and again what the real value of shares could be. Once the shares are paid for, national insurance and pay-as-you-earn taxation will come into play. Forfeiting all those rights for a hefty tax bill does not make sense. One of the strongest arguments for me is that the clause is bad for women, as parents, and carers, who need flexible employment to have the dignity of working while they carry out their valuable roles. Such employment gives them the opportunity to be outside the home and to feel not only that they contribute by looking after their loved ones but that they play a valuable role in society, as well as providing them with a social link with the wider world.
By not having flexible working, people also forfeit the right to training. How does that fit into a Bill about growing the economy? Training for personal and professional development is crucial for firms to grow and expand. We cannot have a standstill work force who do not keep up with all forms of training. People do not feel valued if they do not have that development. We have seen what a difference investing in people makes to firms.
The whole scheme smacks of inequality and goes completely against the equal opportunities that have been so hard-fought for. We could go on: the loss of maternity rights would be something else that disadvantages women.
The clause should be deleted. It is completely against the rights of workers and it will do nothing to grow businesses.
I firmly believe that there is nothing in the Bill to address the root cause of the problem that faces us—the Government’s economic failure. Our economy is only just back to the size it was a year ago, and we have seen a double-dip recession and increased Government borrowing. Adding “growth” to the title of the Bill will not make it so. Even the Prime Minister admits that we cannot legislate for growth.
As we have seen, the Government’s economic plan has plunged Britain into the longest double-dip recession since the second world war. To cover that, they have hurriedly pulled together this flawed piece of legislation. There is nothing in the Bill to address our problems of economic failure; instead, the clause on employee owner shares for rights will only make it an attack on workers’ rights.
The proposals announced by the Chancellor will allow businesses to offer individuals contracts and a new employment status to make them employee owners. Under that new status, employee owners will receive shares in the employer’s company. However, as we know, there is always a catch: in return, employee owners will have to give up certain employment rights, including those on unfair dismissal, statutory redundancy pay and requesting flexible working and training. The scheme has not won support from the business community; a 33-week consultation had more than 200 responses but only five businesses said they would be interested in taking it up.
Labour is in favour of employee ownership, but not coupling it with slashing employment rights. Doing away with people’s rights at work is wrong in principle and will do nothing to bring about growth in our economy.
There are concerns about the full cost of the scheme. It has been said that
“the cost is expected to rise towards £1 billion,”
“Uncertainties abound like assumptions on take up rates, the average value of shares that are entered into the scheme, the extent of tax planning and the timing of disposals.”
According to the Office for Budget Responsibility, a quarter of the £1 billion additional cost—£250 million—is expected to arise from tax avoidance as a result of the scheme.
Slashing the rights of people at work is wrong in principle and will not help bring about jobs and growth; the proposal is yet another example of how out of touch this Government are. The scheme has not won support from business; it has received at best a lukewarm reception. Not even the CBI supports the proposals and called them
“niche…and not relevant to all businesses.”
As we have heard, the chief executive of Sainsbury’s was not exactly over the moon about them either. He was hardly embracing them when he said:
“This is not something for our business...What do you think the population at large will think of businesses that want to trade employment rights for money?”
We all know what we think about that.
My hon. Friend is making an important point. Does the proposal not indicate the Government’s thinking? They are quite prepared to offer the carrot to many companies that they can simply buy out rights at any time in the future. Next time it might be a cash offer or something like that. We legislate to protect all workers. We legislate for all women to have maternity rights. We legislate for everybody. It is not up to a company or a Government to pick and choose who should be eligible for those rights.
My hon. Friend makes a very good point; I could not agree more.
The Chancellor proclaimed that the proposal represented
“owners, workers and the taxman, all in it together,”
but the measure is divisive, goes against the spirit of one nation and risks creating a two-tier labour market across the country.
Offering employee owner contracts, where employees effectively sell their employment rights for shares, is unlikely, if ever, to deliver the highly motivated, engaged work force employers need. Ministers should be making it easier to hire employees, not easier to fire them.
Labour’s jobs plan includes tax breaks for small firms taking on extra employees. Labour supports employee ownership, but not coupling it with slashing employment rights. The US National Centre for Employee Ownership, one of the world’s leading groups promoting share ownership, has also criticised the scheme. The proposal smacks of fire at will. Although Ministers, including the Business Secretary, have claimed they are not going to take forward Mr Beecroft’s fire at will proposals, in practice they are introducing them by the back door. Ministers are trying to introduce the scheme without proper consultation or discussion, or indeed any real support.
The way the scheme will operate in practice and its ramifications are unclear. There are concerns about other ways in which the scheme could have an adverse impact on employees. Will jobs be advertised as being only employee owner and will employers be able to impose the scheme on individual employees or groups of employees? What safeguards will there be to ensure that the scheme is voluntary for existing employees, as Ministers claim?
The clause is a disaster for all, be they employees or employers, and it will not deliver growth in our economy. Businesses that utilise the scheme in recruiting will be recruiting from a smaller pool of talent, which will risk their not being able to take advantage if ever a real recovery comes about.
People giving up their hard-fought employment rights in return for a few shares beggars belief and takes this country back to the dark ages of employment practice. I ask that the clause be dropped.
We have had a good and reasonably balanced debate about the merits of the new employment status created by clause 25. I fully accept that there are concerns about it. Some of them are genuine and I hope to address them a little later. Some are based on a misunderstanding of the intent behind the new employment status and others take no account of the Government amendments that have already been tabled.
I will try to address all the points raised by hon. Members, but I first want to resist the casting of the hon. Member for Edinburgh South (Ian Murray), who suggests that I represent Scrooge in “A Christmas Carol.” Perhaps I could refer him to a better character, Scrooge’s older employer, Fezziwig, who was noted for the magnanimity he displayed towards apprentices and young workers and for the generosity of his Christmas party. Such generosity, I suggest to the House, is reflected in the new opportunities we are extending for share ownership and in the very generous tax relief that comes with it.
Clause 25 creates a new employment status—employee shareholder—in addition to the existing employment statuses of worker and employee. The United Kingdom already has differing types of employment status with different levels of rights and different obligations, to allow businesses and individuals to choose the right type of contract that suits their particular circumstances. It is important, therefore, before we come to consider the new status, that the House understands the differences between existing employment statuses, because each has different employment rights.
Employees, for example, have all employment rights, whereas workers do not have unfair dismissal rights, do not enjoy the right to statutory redundancy pay and do not have other statutory rights. Workers, however, do have the right to the national minimum wage and do have protection against unlawful deductions from their pay, paid annual leave, rest breaks and protection against discrimination, including on the ground that they work part-time. The statuses of worker and employee are distinguished by the level of control and obligation that the employer has over the individual. The employer has a higher level of control over an employee—he can dictate how, when and what an employee does, whereas an employer cannot dictate in the same terms how a worker carries out his work.
The new status that we are considering carries the same level of control as an employee, but links employment with shareholding in the company. Individuals in the new status will have similar rights to employees, but they will not have the right to statutory redundancy pay, the statutory right to request flexible working unless they have returned from parental leave, time off to train, or unfair dismissal rights except for automatically unfair reasons. The new status is designed to give companies more choice in the type of employment contracts they can use to structure their work force. But the flexibility that businesses have is not restricted to different types of employment status. Businesses may already choose to take on somebody as part-time, full-time, permanent or for a fixed period. The important principle underlying the Government’s approach is flexibility. We want to allow businesses a choice of which type of employment contract to use. This new status gives companies an additional option, should they wish to use it. They do not have to use it if it does not fit their business model.
We consulted in October and November on how we could best implement the new employment status. Our consultation lasted for three weeks and we received more than 200 responses. Those were very helpful, along with the discussions that we had on Second Reading and in Committee, and helped us address the areas of the policy that need improving with the set of Government amendments before us. Before I deal with those, let me consider the points raised on the other amendments.
The hon. Member for Hayes and Harlington (John McDonnell) tabled amendments 37 and 60, which would limit how companies can use the new employment status so that, in effect, they could offer it only to existing employees with at least two years’ service. The Government are creating a further employment status to provide additional flexibility and choice for companies in managing their work force. Allowing businesses greater flexibility in how they manage their work force encourages growth and confidence, and the difficulty that I have with the hon. Gentleman’s amendments is that they are restrictive and remove choice from employees and employers.
The employee shareholder status is a novel way for companies to arrange their work force. From its inception, it was principally intended—I think this was the point made by my hon. Friend the Member for Burnley (Gordon Birtwistle)—for fast-growing new companies. The amendment to limit the new status to existing employees would deter or even prevent many newer companies from making use of this innovative and flexible model. It would also prevent new or newly recruited employees from taking advantage of the status that existing employees might already enjoy. As I have just reminded the House, we decided to create a new employment status to give companies additional choice about the contract types they can use for those who work with them and for them.
Amendment 61 would cause inflexibility in the decision-making process for companies by giving their existing work force a veto over the type of employment status which the company may choose to use. The result of the inflexibility caused by amendment 61 would come at a time when companies need to be agile and innovative to respond to changing economic circumstances. Furthermore, we do not force companies to consult in this way if they decide to take on people as workers or as employees. I suggest to the hon. Gentleman that the new status should be no different. The decision on how to structure a work force is for companies to make. They are the ones best placed to determine how they go about employing staff, and the responsibility for deciding which employment status to offer should rest with them. Nor would the amendment be fair to employees in the work force who may wish to take up the option.
Amendment 62, also in the hon. Gentleman’s name, links the minimum amount of shares needed to qualify for an employee shareholder contract to the amount of time that an existing employee has spent in the company. That would introduce a heavy burden on companies wishing to use the new status and is contrary to the objective of the measure, which is designed to create flexibility and choice. We want companies to be able to offer the amount of shares that they consider will enable them to attract or retain the right person. We do not want to prescribe the amount of equity each company should give to employee shareholders. That should be at the discretion of the company and for agreement with the individuals.
However, I am grateful to the hon. Gentleman in one respect. The amendment helps us to remind the House that the value of the shares must not be below £2,000. This is a very important point. If a company issues shares worth less than £2,000 for an employee shareholder contract, the criteria for the contract would not be fulfilled and the person is likely, therefore, to have a normal employment contract. This is an important safeguard, and companies must be confident that the shares are worth at least £2,000 when they are granted to the employee shareholder.
The amendment would have two detrimental effects, first on the company, and secondly and more importantly on the individual. It would force companies to offer employee-shareholder contracts only to newly hired employees or those who have been in the company for less than three years. That would tie the hands of companies when choosing who they wanted to share their equity with. Under the amendment as drafted, an individual who had been working with the company for a long time would be far too expensive for a small company wishing to share its profitability and growth prospects with its work force.
The second problem with the amendment is that it would also hurt existing employees. An individual who had worked for a company for many years might be excluded from taking up the opportunity of becoming an employee shareholder as the company may not be able to grant such a significant number of shares to one individual. That is unfair on people, and would have serious negative consequences for how companies structure their work force and share their equity when they wish to do so.
I turn to the hon. Gentleman’s final amendment, 63. If I understand the amendment correctly, its aim is to require the Government to make a significant change to the constitution of companies and corporate governance more generally. The change would give employee shareholders the right to appoint a director. That goes against the general thrust of all company law by forcing a company to structure itself in a particular way. That is unnecessary. Company law in the United Kingdom is designed to be flexible. It allows companies to choose the structure that best meets their needs.
Under current law, a company may have directors who are appointed by employees or employee shareholders. We consider that a responsible company will have the directors it needs to operate the company effectively. The means of appointing those directors will be set out in the articles of association of the company. There may also be agreements between shareholders that determine how individual shareholders will exercise their rights when appointing directors.
I have said on many occasions and I repeat that it is not the Government’s intention with this new status to force a company to use it, but rather to offer flexibility and a new and creative option for companies. We do not want to force companies to appoint any director in a particular way, but if a company believes that it would benefit from a director appointed only by employee shareholders, that is entirely an internal matter for the company and UK company law permits that.
Let me now turn to the Government amendments.
The hon. Gentleman is right to chide me, because I have missed out that amendment. If I discover it in time, I will try to return to it.
The Government amendments form a package of comprehensive measures that will strengthen the Bill’s provisions for companies and people. They respond to important points raised during the consultation, on Second Reading and in Committee. I hope that they fulfil the undertaking I gave the shadow Secretary of State to ensure that amendments, whether or not he agrees with them, were at least produced before the Bill leaves the House.
First, amendments 22 to 28 would amend the Bill to change the name of the new status to “employee shareholder.”—[Interruption.] Hon. Members cannot have it both ways; they cannot criticise the consultation and say that we did not listen to it when we did. When organisations asked us to change the name, we did exactly that. During the consultation we received comments on the name “employee owner”. I recognise that “employee owner” might be seen as confusing in relation to the wider employee ownership agenda. It is important that we do not confuse people. The name “employee shareholder” is far better at describing the new status, as it links the concept of employment and shareholding.
Secondly, amendment 29 ensures that employee shareholders who are parents can request flexible working once they return from parental leave. The parental leave directive requires that parents should be able to request flexible working after their return from a period of parental leave. The amendment ensures that the UK will be compliant with the directive. We have decided that employee shareholders should have to make a request for flexible working within two weeks of their return. The time limit gives companies employing employee shareholders certainty about the working patterns of their work force.
Let me turn to the issue of shares and what happens to them at the end of the employment relationship, on which we sought views during our consultation. We believe that employers and employee shareholders are likely to agree sensible terms for the disposal and buy-back of shares in order to ensure that the shares have the necessary value to meet the conditions for employee-shareholder status. The Bill is drafted on that basis.
It is not the Government’s intention that employee shareholders should be left with shares that they can sell back to the company only at prices that are unfair or where the buy-back arrangements would leave the employee at a financial disadvantage if there is no other way of disposing of the shares for value. We therefore believe that it is prudent to seek a power in the Bill 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. Amendment 30 creates that power. Let me be clear for the House that the power will be used only if it is needed to safeguard employee shareholders in the unlikely event that employers behave unscrupulously.
That will depend on the particular arrangement that the company has.
Amendment 31 will provide clarity and certainty to employers and individuals who are considering accepting a position as an employee shareholder, as it spells out how shares will be valued. It aids employers who want to be certain that the contract will not be void because too few shares in value have been given. It will therefore reassure individuals that they are getting at least £2,000-worth of shares in consideration for becoming an employee shareholder.
If the company goes bankrupt, the shares will clearly not have their original value.
I must respond to the hon. Member for Hayes and Harlington on amendment 39—I apologise for not doing so earlier. The amendment would remove the distinguishing feature of the new employment status and deprive companies of the flexible way of taking people on, because it would link directly back to employment rights.
I will now turn to the serious points raised by my right hon. Friend the Member for Hazel Grove (Andrew Stunell) and my hon. Friend the Member for Burnley, first in relation to amendment 41. The amendment seeks to ensure that individuals in receipt of benefits should not be disadvantaged if they turn down an employee-shareholder contract. I would like to reassure the House about what the Government have done to ensure that employee-shareholder status does not lead to jobseekers being deprived of benefits if they decide not to take a job they have been offered on the basis of the new status.
My right hon. Friend the Member for Hazel Grove proposed in Committee that the Government should issue guidance to ensure that an individual’s refusal to enter the status voluntarily is not used as grounds for withdrawing or reducing state benefit. He suggested that that should be made explicit in the Bill. The Government recognise that the status should not be regarded as suitable for all businesses or individuals and should therefore be entered into voluntarily and with a clear understanding of what it will mean for them. Although I made it clear in Committee that his proposed amendment would not work, I accepted that it is a serious matter and undertook to consider it carefully. I think that the matter was also raised on Second Reading by the shadow Secretary of State.
The Government have therefore considered what safeguards would be needed to ensure that the individuals receiving benefits are not deprived of them if they reject a job offer as an employee shareholder. I can confirm that the Employment Minister, my hon. Friend the Member for Fareham (Mr Hoban), has also looked at that carefully. The Government believe that jobseeker’s allowance claimants must actively seek and be available for work. That must include consideration of all suitable vacancies, and it is right that employee-shareholder jobs should be as much a part of that consideration as any other. If a claimant applies for an employee-shareholder job and is offered a position, they should normally accept the offer. If they do not, their benefit payments might be sanctioned if they do not have good reason for refusing the offer. Exactly the same rule applies now.
However, in considering whether the claimant does or does not have good reason, the decision maker will take into account the claimant’s individual circumstances and the specific terms and conditions on offer under the company’s employee-shareholder scheme. It is certainly possible to envisage situations where a job that is appropriate for one person may not be for another. For example, the right to request flexible working could well be crucial for a parent with young children and that may therefore be good reason for that parent to turn the job down if they cannot negotiate flexibility.
So that advisers are able to help claimants to make the right decision about employee-shareholder positions, we will provide guidance and information to them on what the status means and the factors that a claimant will need to take into account before making the decision. We will want to ensure that claimants make the right decision, which might be that they decide voluntarily to accept a job on employee-shareholder status. I confirm to my right hon. Friend the Member for Hazel Grove and to the House that we will provide guidance for decision makers to help them to reach consistent decisions in this area, and we will now seek views from key stakeholders to make sure that that guidance is fit for purpose.
The current guidance for decision makers, “Decision Makers’ Guide”, is on the Department for Work and Pensions website. We propose to amend chapter 34 of that guidance to ensure that it is available to decision makers in jobcentres. That safeguard can be put in place without the need for legislation, and the necessary changes will be made when employee-shareholder status is legally implemented.
My right hon. Friend is being very helpful. I think I heard him say that there was to be a process of consultation with stakeholders. Will he say a little more about that? I am sure that Members around the House would want to convey to the Department for Work and Pensions that there is sometimes a gap between the intentions of Ministers and the advice that they give, and the actual practice at individual offices. I would like to hear a little more from the Minister about that link between good intentions and good outcomes.
I certainly accept that point. What comes between the intentions and the outcome is the guidance. There is currently guidance to all staff in jobcentres, and I have already undertaken for my right hon. Friend that we will amend it. However, we will not simply amend it to put my words of tonight into it; we will consult all the various stakeholders involved on how we can make sure that it properly reflects what both he and I want to do.
I am not very comforted by the Minister’s comments, because he seems to be suggesting that there would be circumstances in which it would be unreasonable for a prospective employee to turn down a job offer if it were conditional on employee-owner status. Will he, for the benefit of Jobcentre Plus employees, make it clear that if they have a jobseeker’s allowance claimant who refuses to take a job offer because they do not wish to have employee-owner status and lose their rights, no sanctions should be levied on that prospective employee in terms of the deduction of any benefit or any other adverse consequence? Will he make that clear for the record?
I am happy to make it as clear as I can. By the way, I think that it is somewhat unlikely that the jobcentre applicant in this case will be offered a significant number of shares and then still find himself unable to take up the position. Let us be clear about how the jobcentre system works: these decisions about sanctions are taken on an individual, case-by-case basis. What I am announcing tonight is that the guidance will make it very clear as to the reasons that the employee had to have before having his benefit sanctioned.
Let me turn to the second point raised by my right hon. Friend the Member for Hazel Grove, which is the only really serious issue about this new employment status. As he and my hon. Friend the Member for Burnley have said, it is a voluntary status. No one on the Government Benches wants employees to be pressurised, harassed or bullied into accepting it. We therefore want to ensure that no individual can be coerced into accepting an employee-shareholder contract. Throughout all the discussions since the policy was announced, there have been concerns that existing employees—not new employees, but existing employees—might be coerced into accepting these contracts. I have been very clear that the new status is entirely voluntary, but I wholly accept that it needs to be seen as such.
Amendment 40, tabled by my right hon. Friend the Member for Hazel Grove, seeks to ensure that existing employees are not coerced into the new employment status. The principle behind the amendment is right and the Government support that principle. Indeed, we think there is a stronger way of ensuring that no detriment will arise in the Bill than by relying on secondary regulation, and that is why we have tabled amendments 64 and 65.
Government amendment 64 creates a new right not to suffer detriment if an employee refuses to sign an employee-shareholder contract. This means that if an employee has been overlooked for promotion or has been disadvantaged in any other way because of that refusal, he may then be able to present a claim to an employment tribunal.
Government amendment 65 creates a new unfair dismissal right. This means that if an employee is sacked because he has refused to accept an employee-shareholder contract, this will be regarded as automatically unfair. Importantly, both these rights will apply from day one of an employee’s contract. That means that employees are protected from the first day of their service. I want to place that beyond doubt. Employees cannot be taken on and then, on day two, be forced to become employee shareholders.
I will not, because of the time.
Finally, let me turn to amendment 59, tabled by Opposition Front Benchers, and deal with their opposition to the clause. I have already outlined how the creation of the new employment status adds to the existing statuses of worker and employee. The new status gives companies a new way of taking on individuals, giving both companies and individuals greater choice and flexibility. Removing the clause in its entirety would remove the opportunity for new flexibility and choice for companies. Using the new employment status, just like using the existing status of worker and employee, is a choice for both companies and individuals. By increasing the range of employment statuses, companies limited by shares will have a greater choice about how to grow and adapt their work force. It will also create opportunities for an individual to take up an employment status that may allow them to share in the rewards of a company.
It is for the company to decide what type of contract will be most suitable for it to offer, depending on its requirements and circumstances. The clause does not prevent employers from offering more rights to their staff, such as a contractual right to request flexible work or contractual redundancy pay, just as they can now do with all other existing employment contracts.
This is not about taking away employment rights; it is about creating a new employment status with a different set of rights, just as there are different rights associated with being an employee or a worker. This Government want companies and people to share in the risks and rewards that share-ownership offers, and this is a new way to do so. The clause should remain part of the Bill, to give people and companies a new way of working together, and I urge the House to reject Opposition amendment 59.
The Minister said that he was not Ebenezer Scrooge, but Fezziwig. Wikipedia explains that Fezziwig is
“a happy, foppish man with a large Welsh wig.”
Let us see whether that description fits the right hon. Gentleman.
The employee-shareholder schemes will not be voluntary and will have absolutely no value. How can the Minister tell the House that he knows better than the 204 respondents to the consultation who said that this policy was, as Dizzee Rascal would say, to give a more contemporary reference, “Bonkers”?
I finish by echoing the Business Secretary, who said that this provision would not be compensated no-fault dismissal by the back door. I could not agree with him more: this proposal is no-fault dismissal without any compensation. Anybody who cares about business and employees in this country will join us in the Lobby.
Question put, That the amendment be made.
Amendments made: 22, page 32, line 11, leave out ‘owner’ and insert ‘shareholder’.
Amendment 23, line 12, leave out ‘owners’ and insert ‘shareholders’.
Amendment 24, line 14, leave out ‘owner’ and insert ‘shareholder’.
Amendment 25, line 16, leave out ‘owner’ and insert ‘shareholder’.
Amendment 26, line 24, leave out ‘owner’ and insert ‘shareholder’.
Amendment 27, line 32, leave out ‘owner’ and insert ‘shareholder’.
Amendment 28, line 44, leave out ‘owner’ and insert ‘shareholder’.
Amendment 29, page 33, line 2, at end insert—
“( ) The reference in subsection (2)(b) to making an application under section 80F does not include a reference to making an application within the period of 14 days beginning with the day on which the employee shareholder returns to work from a period of parental leave under regulations under section 76.’.
Amendment 30, line 13, at end insert—
“(7A) The Secretary of State may by regulations provide that any agreement for a company to buy back from an individual the shares referred to in subsection (1)(b) in the event that the individual ceases to be an employee shareholder or ceases to be an employee must be on terms which meet the specified requirements.’.
Amendment 31, line 24, at end insert—
“( ) The reference in this section to the value of shares in a company is a reference to their market value within the meaning of the Taxation of Chargeable Gains Act 1992 (see sections 272 and 273 of that Act).”’.
Amendment 64, line 24, at end insert—
‘( ) After section 47F of the Employment Rights Act 1996 insert—
“47G Employee shareholder status
(1) An employee has the right not to be subjected to a detriment by any act, or any deliberate failure to act, by the employee’s employer done on the ground that the employee refused to accept an offer by the employer for the employee to become an employee shareholder (within the meaning of section 205A).
(2) This section does not apply if the detriment in question amounts to dismissal within the meaning of Part 10.”
( ) In section 48(1) of that Act (presentation of complaint to employment tribunal), for “or 47F” substitute “, 47F or 47G”.’.
Amendment 65, line 24, at end insert—
‘( ) After section 104F of the Employment Rights Act 1996 insert—
“104G Employee shareholder status
An employee who is dismissed is to be regarded for the purposes of this Part as unfairly dismissed if the reason (or, if more than one, the principal reason) for the dismissal is that the employee refused to accept an offer by the employer for the employee to become an employee shareholder (within the meaning of section 205A).”
( ) In section 108(3) of that Act (exceptions to provision on qualifying period of employment), after paragraph (gl) insert—
“(gm) section 104G applies,”.’.
Amendment 32, line 26, leave out ‘205A(5A)’ and insert ‘205A(7) or (7A)’.—(Michael Fallon.)
New Schedule 1A to the Commons Act 2006
In Committee, we discussed at length the process of registering town and village greens, and the value of such spaces. My hon. Friend the Member for Rochdale (Simon Danczuk) reminded the Minister of the speech by a previous Conservative Prime Minister, who spoke about warm beer, swallows overhead and cricket on the village green. We were led to think how odd it was, and how much coalition must have changed the Conservative party, that Opposition Members were having to protect precious town and village greens. Clearly, hon. Members on both sides have open spaces in their constituencies that they and their communities want to preserve. Unfortunately, it was made clear to the Committee that there are instances of vexatious applications for town and village green registration that are intended to stymie development, rather than to protect open space. Although such instances are relatively few in the grand scheme of things, they do delay much-needed development. That is why the Local Government Association and other organisations that, like us, want to encourage sustainable development are in favour of placing some limits on the registration of town and village greens, but we think that schedule 4, in particular, goes much too far along that road.
The Open Spaces Society has helpfully provided us with a long list of cherished greens that would not have been registered had the Bill been in place. I urge Members to think about land that might be lost if the schedule is passed unamended, before they vote in support of it. Some of the triggers in schedule 4 are reasonable. For instance, trigger 6 states that, if a neighbourhood development plan identifies a piece of land for development, it cannot be registered. If a neighbourhood plan is in place, it will have been drawn up by residents, published, consulted on and agreed by local people, and land that they have democratically identified for development should be kept as such, but some of the triggers go too far, and it is these that the amendments would delete to ensure that local people can still protect land that is important to them.
If the hon. Lady believes in localism, would she not encourage local communities to use the new local green space designation introduced in the national planning policy framework, which can be made use of at the time of plan-making and so is a more reliable route to protecting local valued green spaces than the village green process, which is a bit haphazard at the best of times?
The hon. Gentleman makes an interesting point that was also made by the right hon. Member for Hazel Grove (Andrew Stunell) in Committee, but he ignores the fact that a number of communities have not yet been able to draw up a neighbourhood plan. We are terribly concerned—this is the reason for the amendments—to ensure that simply publishing a draft neighbourhood plan does not mean that a village green cannot be registered. That is really important. We asked the Minister to think about delaying the operation of the triggers to enable all communities to develop neighbourhood plans, but sadly I was disappointed once again by his response.
I thank the hon. Lady for giving way—I know that time is short—but I draw her attention to section 87 of the Localism Act 2011, which deals with lists of assets of community value and under which any village green candidate could be listed. That has nothing to do with neighbourhood plans. I also draw her attention to sections 76 to 79 of the national planning policy framework. I think she is going for overkill on this one.
I am afraid that the Open Spaces Society simply does not agree with the right hon. Gentleman. It made it clear in its briefing to Members on Report:
“The government claims that people would know of the threats through the neighbourhood planning process, but this process is in its infancy and is not widespread. Those who use and enjoy their local open spaces are usually doing just that and are not necessarily clued up about, or involved in, the planning process, and they cannot be expected to know or realise that there is a potential threat to their rights. Moreover those who may be aware of the neighbourhood planning process may not be the same people enjoying the use of a particular piece of land and thus would not be in a position to know that such land is being used as of right.”
It seems odd to give communities the right to register village greens under the Localism Act and the neighbourhood planning process—rights that have not yet been firmly embedded in all communities—while in the Bill taking away rights to register village greens. We ask the Minister to think again.
The amendments are identical to those that were moved in Committee, and I explained then that they would weaken the Bill by bringing in trigger points far later in the planning process. The Government do not understand why that is needed and we think it undermines the ability of local authorities and neighbourhoods to contribute to their own plans. The amendments were misguided when they were moved in Committee and they are equally misguided this evening. If the hon. Member for City of Durham (Roberta Blackman-Woods) suggests pushing the amendment to a vote, I urge my hon. Friends to reject it—
Debate interrupted (Programme Order, this day).
The Deputy Speaker put forthwith the Question already proposed from the Chair (Standing Order No. 83E), That the amendment be made.
The Deputy Speaker then put forthwith the Questions necessary for the disposal of the business to be concluded at that time (Standing Order No. 83E).
New Clause 3
Variation and replacement of pre-Planning Act 2008 consents
‘(1) After section 237 of the Planning Act 2008 insert—
“237A Variation and replacement of section 33 consents: transitional provision
(1) This section applies where a section 33 consent (“the original consent”) has been given or made as a result of an application made before Part 4 came into force.
(2) Nothing in section 33 prevents the original section 33 consent, or a section 33 consent that replaces it, from being varied or replaced.
(3) Subsection (5) applies if the original consent, or a section 33 consent that replaces it, is varied or replaced, and the remaining development is development for which development consent would otherwise be required.
(4) “The remaining development”—
(a) in a case where the consent is varied, is the development to which the consent as varied relates, to the extent it has not already been carried out;
(b) in a case where the consent is replaced, is the development to which the replacement consent relates, to the extent it has not already been carried out.
(5) Section 31 does not apply to the remaining development (and so development consent is not required for it).
(6) A section 33 consent replaces an earlier section 33 consent for the purposes of this section if (but only if)—
(a) it is granted or made on an application for consent for development without complying with conditions subject to which the earlier section 33 consent was granted or made, and
(b) it is granted subject to, or made on, different conditions, or unconditionally.
(7) In this section “section 33 consent” means a consent, authorisation, order, notice or scheme mentioned in section 33(1), (2) or (4).”
(2) This section is deemed to have had effect since Part 4 of the Planning Act 2008 came into force.’.—(Michael Fallon.)
Brought up, and added to the Bill.
Variation of consents under Electricity Act 1989
Amendments made: 7, page 18, leave out lines 40 and 41.
Amendment 8, page 19, line 25, leave out subsection (3). —(Michael Fallon.)
Consents under Electricity Act 1989: deemed planning permission
Amendments made: 9, page 19, line 41, leave out ‘Before subsection (2) insert’ and insert ‘For subsection (2) substitute’.
Amendment 10, page 19, line 42, leave out ‘(1A)’ and insert ‘(2)’.
Amendment 11, line 44, after ‘England’, insert ‘or Wales’.
Amendment 12, page 20, line 5, leave out ‘(1B)’ and insert ‘(2ZA)’.
Amendment 13, line 6, after ‘England’, insert ‘or Wales’.
Amendment 14, line 8, leave out ‘(1A)’ and insert ‘(2)’.
Amendment 15, line 10, leave out ‘(1A) or’.
Amendment 16, line 20, leave out subsection (3).
Amendment 17, line 23, leave out ‘subsections (1A) and’ and insert ‘subsection’.
Amendment 18, line 23, leave out ‘references’ and insert ‘reference’.
Amendment 19, line 24, leave out ‘do’ and insert ‘does’.
Amendment 20, line 27, after ‘England’, insert ‘or Wales’.
Amendment 21, line 28, after ‘England’, insert ‘or Wales’.—(Michael Fallon.)
New Clause 4
Power to postpone compilation of Welsh rating lists
‘(1) Before section 55 of the Local Government Finance Act 1988 (but after the italic heading before that section) insert—
“54A Postponement of compilation of Welsh lists for 2015 onwards
(1) The Welsh Ministers may by order provide that the lists to which this section applies must be compiled on a date specified in the order (“the specified date”) rather than on 1 April 2015.
(2) The lists to which this section applies are—
(a) each local non-domestic rating list that would otherwise have to be compiled on 1 April 2015 for a billing authority in Wales, and
(b) the central non-domestic rating list that would otherwise have to be compiled for Wales on that date.
(3) The specified date must be 1 April in 2016, 2017, 2018, 2019 or 2020; and the same date must be specified for each list to which this section applies.
(4) If an order has effect under this section, section 41 (local rating lists) applies in relation to billing authorities in Wales as if subsection (2)—
(a) did not require a list to be compiled on 1 April 2015 and on 1 April in every fifth year afterwards, but
(b) instead required a list to be compiled on the specified date and on 1 April in every fifth year afterwards.
(5) If an order has effect under this section, section 52 (central rating lists) applies in relation to Wales as if subsection (2)—
(a) did not require a list to be compiled on 1 April 2015 and on 1 April in every fifth year afterwards, but
(b) instead required a list to be compiled on the specified date and on 1 April in every fifth year afterwards.”
(2) In section 41 (local rating lists), after subsection (8) insert—
“(9) This section in its application to Wales is subject to section 54A (postponement of compilation of Welsh lists for 2015 onwards).”
(3) In section 52 (central rating lists), after subsection (7) insert—
“(8) This section in its application to Wales is subject to section 54A (postponement of compilation of Welsh lists for 2015 onwards).”
(4) In section 143 (orders and regulations), after subsection (3B) insert—
“(3C) The power to make an order under section 54A is exercisable by statutory instrument, and no such order is to be made unless a draft of the order has been laid before and approved by resolution of the National Assembly for Wales.”’.—(Michael Fallon.)
Brought up, and added to the Bill.
Amendments made: 33, page 34, line 24, after ‘6,’, insert ‘8, 17, 23,’.
Amendment 34, line 26, leave out ‘, 17’.
Amendment 35, page 34, line 26, leave out ‘and 24’ and insert
‘, 24 and [Power to postpone compilation of Welsh rating lists]’.—(Michael Fallon.)
Amendment made: 66, line 5 leave out ‘owners’ and insert ‘shareholders’.—(Michael Fallon.)
Queen’s consent signified.
I beg to move, That the Bill be now read the Third time.
The Bill is about the coalition’s priority: promoting economic growth. It contains a range of practical measures to boost infrastructure, increase housing supply and simplify planning rules, and all those things will make a difference now. I am grateful to the House for acting so swiftly in considering the Bill and I thank all colleagues who have contributed today, in Committee and on Second Reading. I particularly wish to thank the Under-Secretary of State for Communities and Local Government, my hon. Friend the Member for Grantham and Stamford (Nick Boles), who shouldered most of the burden, and the Opposition for ensuring that, although we did not come to agreement on all the main issues, they were at least properly ventilated and discussed.
As amended, the Bill will provide for commencement on Royal Assent for clauses that support stalled sites being unblocked, broadband being rolled out, the removal of legislative blocks on the gas innovation network competition, and broadening the major infrastructure regime—key reforms to promote growth, on which the Government are acting decisively. It is regrettable that the Labour party stands alone in failing to appreciate the urgency of the Bill and in continuing to oppose it.
Does the Minister agree that where the landowner blocking a development happens to be a Government Department—that is the case with the national health service and the missing link of road infrastructure in north Colchester—other Departments must bring pressure to bear and have joined-up governance so that the land can be released, rather than other less-desirable land going instead?
I understand that and it is such a skilful piece of constituency pleading that I fear I may have to address it in greater detail in writing. I will do that in the next few days if the hon. Gentleman will allow me.
Local councils and communities are at the heart of the planning process and we have no intention of changing that. We reject the flawed approach of top-down Whitehall housing targets and it is for local councils to determine where development should go and how best to meet housing need. That is why our policy is to revoke Labour’s regional strategies as soon as possible. Indeed, we have laid an order in Parliament to revoke the east of England regional strategy, which will come into force on 3 January.
Our reforms have given significant additional power to councils and communities but with that comes the responsibility to exercise planning functions properly. The measures in the Bill for tackling poor performance are aimed squarely at councils that are failing to deliver an effective service. Applicants can reasonably expect timely and good quality decisions—justice delayed is justice denied. Most councils deal with planning applications efficiently, but a small minority need to raise their game if we are to ensure that their local areas do not lose out in the recovery that is now under way. The Bill is therefore not about removing local people’s involvement in planning decisions. Where a decision is made by the Planning Inspectorate, local people will still have their say in the same way as they would if the decision were made by their local planning authority, but slow decisions are bad for local communities as well as for the wider economy.
The Bill also seeks to broaden the scope of the nationally significant infrastructure planning regime to promote investment, so that developers of large-scale business and commercial schemes will have the option to request to use the infrastructure regime. Given that the speed with which large-scale major applications are determined is falling, it is right to offer developers an alternative.
The need for affordable housing remains high, and the coalition is committed to unlocking stalled sites where affordable housing obligations make them unviable because they are economically unrealistic or were negotiated during Labour’s housing bubble. Let me repeat: affordable housing that is stalled is not affordable housing; it is non-existent housing. The Bill will enable developers to challenge the affordable housing elements if they make the site unviable.
As well as making those reforms to the planning system, the Bill will facilitate infrastructure investment, which is crucial for jobs and growth. Our ambition is for the UK to have the best superfast broadband of any major European country by 2015. It is vital that the deployment of broadband is fast-tracked to support the UK’s long-term economic future, but roll-out is being delayed or blocked because of planning requirements. As a result of this Bill alone, we estimate that 4.4 million more people will have access to superfast broadband. Without that measure, many hard-to-reach areas would be left unserved.
The Bill also amends the Electricity Act 1989 so that developers of power generating stations that want to apply to change their projects will in most cases need to undertake only a three-month consultation, rather than going through the whole process of applying for consent again. That could unlock investment decisions across a range of technologies, bringing thousands of new jobs and millions of pounds of investment to the UK economy.
As well as making the reforms I have mentioned, the Bill cuts red tape to speed up processes. In particular, it carries forward recommendations from the Penfold review of non-planning consents, most significantly the reforms to the town and village green registration system, which we discussed albeit briefly just before Third Reading.
As well as making the reforms to the planning system and unlocking infrastructure investment, the Bill contains two important economic measures. First, it postpones revaluation 2015 in England to avoid local firms and shops facing unexpected hikes in their business rate bills over the next five years. As business rates are linked to inflation, there will be no real-terms increase in rates over the period. That reform will provide certainty for business to plan and invest, supporting local growth. Secondly, as we have discussed at some length, the Bill creates a new employee-shareholder status to increase the range of employment contracts that businesses and employees can use. The measure is about increasing choice and flexibility in the employment relationship. The Bill makes it absolutely clear that it will be for the employer to choose to offer the new status, and for an individual to choose whether to accept it.
In conclusion, the House this evening has the chance to vote for practical measures to boost growth. The Bill will unblock delays in the planning system, encourage faster roll-out of superfast broadband, bring forward investment in energy projects, and give employers and employees more choice and flexibility. The Opposition repeatedly attack the Government for failing to do enough on growth, as if some magic wand could repair at a single stroke the terrible damage they inflicted on our economy. In the Leader of the Opposition’s speech to the CBI last month, he said:
“Enterprise and job creation are fundamental to the good economy and good society, and I will lead a party that understands that at its core”,
but businesses that back the Bill will see that, when his party has the chance to live up to those words and support reforms to promote growth, it votes against them. Government Members instinctively understand enterprise and will back the risk-takers and those willing to invest in creating jobs and growth. We want to help to modernise our economy, our infrastructure and our planning system. Only one part of this country resists modernisation—the Labour party. Better planning, more affordable housing, faster broadband, bigger investment in infrastructure and a boost for share ownership are the core of the Bill, and I commend it to the House.
I, too, want to begin by thanking all Members who have contributed to the debate and by acknowledging all the hard work undertaken in Committee. In particular, I thank my fellow shadow Minister, my hon. Friend the Member for Edinburgh South (Ian Murray), for his highly effective dissection of key clauses. I also want to thank my right hon. Friend the Member for Greenwich and Woolwich (Mr Raynsford) and my hon. Friends the Members for Scunthorpe (Nic Dakin), for Rochdale (Simon Danczuk), for North Tyneside (Mrs Glindon) and for Sheffield Central (Paul Blomfield) for their excellent comments in Committee and today.
The best thing that I can say of the Ministers is that they have been extremely gracious in rejecting all my suggestions for improving the Bill. Let us be clear: the Bill will do little to promote growth or to encourage the delivery of infrastructure. As the shadow Secretary of State, my right hon. Friend the Member for Leeds Central (Hilary Benn), said in Committee, it is a “rag-bag of measures” put out in haste in September as one of a number of panic measures to suggest that the Government were doing something to address the flatlining economy. There are so many things wrong with the Bill that I simply do not know where to start, but I shall highlight some of the worst offenders.
As I have said, it has not proved possible to improve the Bill in Committee or on Report today, and that is a matter of regret. The centralising, anti-localist processes that underpin clause 1 are still there. Let us be clear: this will lead to local communities losing their ability to influence planning decisions that relate to their areas. The Conservative-controlled Local Government Association has stated that clause 1 could be “counter-productive”, as the proposed criteria for measuring performance—the time taken to make a decision on major applications and the proportion of major decisions overturned on appeal—will result in a focus on blunt targets, driving unintended consequences and behaviours.
The LGA goes on to say that the Bill goes against the localism agenda by shifting authority and resources away from local planning authorities and over to the Planning Inspectorate. I could not agree more. We said several times in Committee that if the Minister was serious about improving the performance of planning authorities, he should, instead of imposing the measures in clause 1, fund the kind of projects that were clearly outlined in our evidence sessions by the Royal Town Planning Institute, the Town and Country Planning Association and others. Such projects would provide intensive support to local planning authorities, and evidence has clearly shown that they can turn authorities around. The Campaign to Protect Rural England has also said that, although the Government say that they want to improve the performance of local councils on planning, the Bill’s approach will be counter-productive.
We have not yet said anything today about clause 5, or about the changing demands for information from local authorities when determining applications, but we must ensure that those authorities get the information that they need to make good determinations. Speed does not necessarily make for a better decision, and a lack of relevant information will simply hold up the determination process.
As we said earlier, the introduction of clause 6 is simply disgraceful when the country is so short of affordable housing. Figures make clear the desperate need for affordable housing clear. As we noted, there was a 9% increase in statutory homelessness between April and June this year, and a 23% increase in rough sleeping over the last year. It is simply outrageous that the Government should be bringing forward measures that seek to reduce the supply of affordable housing in this country. Any measure that would reduce the level of affordable housing, other than through sensible renegotiations being undertaken by local authorities, should be rejected by this House.
I hope that Members in the other place manage to persuade the Government of the error of their ways, as we have not managed to do so here. In particular, the Minister should give serious consideration to keeping land for affordable housing in place and using money allocated by the Government for affordable housing to enable schemes deemed unviable to go ahead. The Minister has refused to look at this today, but I hope he will look at it again. The failure to accept any of today’s amendments leads me to question the motive behind clause 6. It looks more and more like a device to let unscrupulous developers renege on their section 106 obligations.
The Bill also risks huge damage to our environment by giving inadequate protection to areas of outstanding natural beauty, national parks, conservation areas and so on. It is not acceptable to reduce the current protection by allowing economic criteria to be part of the determination. This could reduce the ability of local authorities to ask for sensitively sited cabinets, no overhead cables and the like.
I represent the Vale of Clwyd, which has an area of outstanding natural beauty. One of the chief people in charge of it, Howard Sutcliffe, asked me to relay to Parliament his concerns about this issue. We have a beautiful area in the Vale of Clwyd, and the laws proposed by the Tories will diminish it.
My hon. Friend makes the point well. The Government have given absolutely no evidence in support of this case. We noted in Committee that BT had said a number of cabinets had been delayed, but what had led to that delay was not made clear. No evidence has been provided to show that it was because local authorities were not considering economic criteria; it was simply that they did not wish their areas to be ruined by the unsightly and inappropriate siting of broadband cabinets and overhead cables.
We need to limit clause 8 so that it covers broadband only. As I said earlier, we support broadband roll-out and did much in government to facilitate it, but this Bill does not have the balance right. It is playing fast and loose with our areas of outstanding natural beauty and our national parks, and it is putting at risk the development of tourism in some of those areas. As such, this could be a profoundly anti-growth measure when it comes to developing the tourist economy in a number of areas.
A range of organisations have made a number of points to the Government, so I hope they will take this issue away and look at it again. We need to take great care with our areas of outstanding natural beauty and national parks. I am sure Government Members do not wish to have these areas cluttered up with mobile masts, overhead cables and unsightly cabinets; I am sure they would want to think again in the interest of protecting our wonderful natural environment and developing tourism sensitively in those areas.
The balance is also not right with regard to the registration of village greens. Communities need time—we accept that the period could be short so that development is not held up—to register a green once it appears in a draft plan. We want to limit the trigger-happy tendencies of the Secretary of State, so clause 15 needs to be looked at again.
If the Government are serious about using major infrastructure projects to promote growth, they must do better than the measures in the Bill. Simply allowing developers to bypass local communities in decision making will not necessarily lead to new development. We need to establish that the Planning Inspectorate system will be quicker, that there will be criteria enabling it to speed up work, and that it can be applied consistently across the country.
Business needs access to finance and markets need to grow, but strangely there is no mention of that in the Bill. Tinkering around with planning is not the solution to the need for more infrastructure or economic growth. The Town and Country Planning Association has said that the Bill
“has the potential to undermining public legitimacy without dealing with core barriers to growth which are primarily the availability of credit (both development finance and mortgage availability) and the capacity and skills of the planning service.”
That is an excellent point, but the Government have not raised such issues in the Bill or in the discussions that have accompanied it.
The Government have also given no reason for the delay in business rate revaluation. They must provide evidence of winners and losers, because otherwise it will be suspected that the Bill was designed simply to help businesses in more prosperous areas.
Asking workers to give up substantial employment rights won over many decades in return for a few shares is simply deplorable. Despite the amendments that we have discussed today, the Bill could lead to pressure on employees to sign up. In Committee and again today, the Minister has shown no real understanding of the lengths to which people will go to save or retain their jobs, or to apply for jobs. He needs to take that on board.
During our debate on clause 25, a number of Members on both sides of the House gave examples—real examples from their constituencies—illustrating our concern about the clause. We fear that, rather than being voluntary, the arrangement that it proposes will cause many people to be persuaded to take up this new employment status—perhaps against their short-term or long-term interests—and to give away rights which, as I said earlier, have been fought for over generations, in return for a few shares. Incidentally, the shares will not necessarily have been valued. The Minister has still not made clear what will happen to them, or, indeed, to the employment rights of the people who have bought them, should the company go into liquidation.
I listened carefully to what the Minister said about amendment 59, but I heard nothing that allayed my concerns. Indeed, I heard quite the opposite. The Minister was asked to give a categorical assurance that people seeking employment through a jobcentre who refused to attend an interview because the job would require them to take up employee shares would be entitled to refuse to attend without a sanction being applied to their benefits. The Minister told us this would be assessed on a case-by-case basis. That means there must be a set of circumstances in which an individual who refuses to attend an interview for a position that will lead to their being an employee share owner will have their benefit removed.
My hon. Friend makes an interesting point that I will address later. At the last count, the number of consultations underpinning this Bill had risen to four—or perhaps five—and we have had at least six sets of guidance. As far as I am aware, however, the final guidance has not yet been produced. We will wait to hear what the Minister has to say on that.
I have said that we will provide fresh guidance to decision makers to help them make consistent decisions. The current guidance is referred to as the decision makers guide. We will consult all the key stakeholders involved to make sure the new guidance properly reflects the position I have outlined and the reassurances I have given.
I heard what the Minister said about the guidance, but Opposition Members are looking for a categorical assurance that people who refuse to attend an interview for a job that will lead to their having to give up all their employment rights will not have their benefits stopped as a consequence. That requires a yes or no answer. If the Minister wants to make it clear that the answer is no, I will happily take an intervention from him now. As he does not rise, I think we can assume that no such assurance can be given. That shows why have so many grave concerns about clause 25.
We will certainly be voting against the Third Reading of this horrible, nasty little Bill that does little to promote growth, but risks employees’ rights and the protection of our environment, while also reducing the amount of affordable housing. The Wildlife Trusts’ comments are pertinent:
“Our primary concern is that the Bill perpetuates the myth that planning is responsible for holding back growth rather than focusing on the significant issues of financial restraint and borrowing difficulties. We believe that this approach to growth, risks putting our natural capital at risk and undermining future prosperity.”
I hope the Minister listens to the Wildlife Trusts, even if he will not listen to us. This Bill changes the basis on which planning applications are determined by breaking the trust with local communities, and thus we must vote against it.
As the Bill’s title suggests, it is about growth and infrastructure, but, as I pointed out earlier, problems arise when we have growth without infrastructure. The rhetoric on the national stage is one thing, but the reality in individual constituencies is quite another when the Government own the land where infrastructure development is being stopped.
Let me explain the situation in respect of the northern approach road from junction 28 of the A12 to Colchester mainline station. Sections one and three have been constructed, but section two, which goes through NHS land, has not, because the NHS trust has so far failed to take it forward. I urge the Under-Secretary of State for Communities and Local Government, the hon. Member for Grantham and Stamford (Nick Boles), to visit my constituency, following on from the excellent work of the hon. Member for Bromley and Chislehurst (Robert Neill), who met members of the Myland community council to see what can be done there.
The population of the borough of Colchester has increased by 17,278 in the decade between the 2001 and 2011 censuses. That is an increase of 11%, almost double the Essex increase, and as the Minister of State suggested, the east of England is the fastest growing region in the country. To put it simply, we need infrastructure so that land elsewhere in the town is not used when that would be undesirable. By that, I mean the fields of west Mile End, which the Secretary of State has personally viewed.
In summary, observers are warning that the town’s expansion is happening too fast for its facilities and infrastructure to cope. I therefore urge Ministers to consider local examples, such as the ones I have given, to ensure that infrastructure goes in where people want it and to avoid the alternative, which is the largest housing estate in the country, with 1,600 houses, served by a cul-de-sac more than 1 mile long.
Let me start by agreeing with the Minister of State’s opening remarks. He said that the Bill is about the Government’s priorities and I agree with him: it is about obfuscation, smoke and mirrors, waffle and self-delusion. It seeks to give the impression of activity when the Government are doing next to nothing to stimulate growth in the economy and to ensure that there is the infrastructure investment we need. It might be entitled the Growth and Infrastructure Bill, but I would be astonished if five years down the line anyone could identify a significant economic consequence for either growth or infrastructure investment.
The Bill essentially reflects Government prejudice rather than evidence. That is the biggest single charge against the Government: rather than evidence-based policy making, we have been fed a diet of prejudices about the supposed failure of the planning system, the discredited Beecroft agenda, how regulation and workers rights are somehow impeding growth and the fear of revaluation—I shall come back to that, because it is a curious question that reflects something in the Government’s psyche that they would do well to begin to think about.
Let us turn to planning first. Everyone who gave evidence to the Public Bill Committee said quite clearly—Ministers know this—that we are not getting development, housing and economic growth not because of the planning system but because of the lack of confidence and lack of lending, as well as because of the fact that people are very nervous about investing because they are uncertain about the future of the economy. That is the fundamental problem and the Government ignore it at their peril.
As everyone has heard, planning is a useful whipping boy blamed by the Government for any problems. As we listened to Ministers, we heard them changing their tune as the debate went on. They started by saying that all the planning problems were holding back growth, but by the end they were saying that only a small number of councils were not acting as well as they should. They said that the intention was to incentivise those councils and that it would not impact heavily on or affect many of them, as not many were failing. The fascinating thing about that is that when they were challenged they could not name a single such authority. The Secretary of State, who sadly is no longer in the Chamber, had a go on Second Reading, but got it spectacularly wrong, naming an authority that was not in any way failing. That is the measure of the Government; they really do not know what they are talking about. It is prejudice rather than evidence.
When we come to Beecroft, the situation is exactly the same. I have to say this to the Liberal Democrats: what a disgrace that they have gone along with the Beecroft prejudice about employee rights when their Business Secretary said that he had stopped the implementation of the Beecroft agenda. Would that he had, but he has not, and the rephrased employee ownership option—changed to shareholder ownership because the Government realised that calling it employee ownership would probably contravene the Trade Descriptions Acts—is universally condemned by people who really care about employee ownership. All the organisations who gave evidence to us—the people who have worked for years to build up employee ownership—said, “Don’t do this.” They told us that it would discredit the whole process of getting employees more involved in the running of their businesses and the measure was a fraudulent product that would do harm, not good.
That was the second prejudice. I have already referred to the third one—the extraordinary postponement of the business rate revaluation. Why is there somewhere in the psyche of the Conservative party a fear of revaluation? The Conservatives think it is somehow going to cause them harm. I suppose it is because the revaluation is due to take effect in 2015, and they probably think it might be bad news and that if they can halt it they might be able to turn it around. Once again, they have acted on the basis of bogus figures that no one believes. When the rating experts gave evidence—Gerald Eve, the British Property Federation and the British Council of Shopping Centres—they all said that they did not believe the figures from the Valuation Office Agency. Ministers have trotted the figures out again today—800,000 potential gainers, compared to 300,000 losers. No one believes it. When we proposed the simple amendment that the Government should publish serious estimates and consult the interested parties before taking a decision, they would not accept it. They wanted to proceed on the basis of their prejudice rather than on evidence.
In between the bookends of prejudice that characterise the Bill, there are one or two worthwhile and sensible provisions, and I welcome them. The Penfold agenda for the rationalisation of conflicting planning and consent regimes is a sensible move forward, and there are some good things in that area, but it is hard to find them with those awful, unjustified, un-evidence-based prejudices on either side of them.
It is to the Government’s credit—this is a seasonal comment as we approach Christmas—that Ministers have realised that there are some turkeys in the Bill that had to be changed. I thank the planning Minister, the Under-Secretary of State for Communities and Local Government, the hon. Member for Grantham and Stamford (Nick Boles), for agreeing to reconsider the rural exceptions policy; the Government were going to make a serious mistake, but they have backed away and I am grateful to them for that. But those are small mercies in a Bill that is fundamentally flawed and will do nothing about the two subjects that it is supposed to stimulate—growth and infrastructure—and will actually perpetuate a series of myths that do nothing for good government or development in this country.
It is a great pleasure to follow the right hon. Member for Greenwich and Woolwich (Mr Raynsford), but it will come as no surprise to the House that I do not agree one jot with what he said.
I spoke on Second Reading, I participated in the Committee and it is a pleasure to speak on Third Reading. Before that, I was intimately involved in the production of the Localism Act 2011 and the national planning policy framework, so I can assure the right hon. Gentleman that planning was no whipping boy. In “Open Source Planning” I set out a vision of how the planning system should operate and the Government have more or less faithfully fulfilled it in their reforms. Planning was not a whipping boy; it was given proper status, as it was in my Second Reading speech when I pointed to surveys showing the overwhelming impression among business that planning was the great preventer of development.
Both the Opposition and the LGA entirely missed the point about localism. Localism was always a double devolution. The first devolution was down to local councils, whether they were district or borough councils. The second devolution, which was just as important, was down to local people, principally through their parish and town councils, but generally to the people at large to deal with.
It is not surprising that the LGA is interested only in the first of these. It is not interested in devolving power from itself down to community groups. It is interested in retaining that power. The purpose of the Bill is to deal with district or borough councils that cannot or will not let go and complete the devolution process. Clause 1 partly deals with that aspect of localism. It is an incentive for those councils to get it right and to get their act together.
I want briefly to discuss a couple of other points. In Committee and in the earlier debates today we heard a great deal about section 106 agreements, but nothing more powerful has been said about the proposal for section 106 than that a share of nothing is still nothing. It is to the credit of my hon. Friend the planning Minister that we have pushed forward the renegotiation of section 106 in order to ensure that a share of something is something.
Similarly, let us not forget that the reason we were discussing the clauses on village greens is that they are a direct result of the Penfold review. It is a treatment of a situation in which a non-planning regime for village greens rubs up against a planning regime in neighbourhood planning and, as the right hon. Member for Hazel Grove (Andrew Stunell) made clear, in assets of community value. It is instructive that the Opposition have tried to confuse the two and not kept them separate. The village greens legislation is separate from the planning legislation. It should not be used to confound planning proposals. It is right that we have split it as we have and that we should be given credit for doing that.
There are many other aspects of the Bill that I could trespass on to, but I will give other Members a chance to speak. The Bill is a perfectly formed example of its type. It could not be more different from the description given by the right hon. Member for Greenwich and Woolwich. It is a perfectly formed Bill that we should vote for with absolute confidence.
Serving on the Bill Committee confirmed to me that all of us in the House are human, to a greater or lesser extent. I genuinely believe that the coalition Government want to see growth, but their approach is wrong.
It has already been said that this is not a Bill for growth. I am sad to hear Members on the Government Benches decry what has been said by the Local Government Association, an association that is trusted by all the councils throughout the land and their representative body. What could be more representative of our local communities and the elected bodies that represent them than that body? The Government would really have shown a commitment to growth if they had listened to the LGA’s suggestions on the Bill. It said that planning is not why no construction work is going on; the reason is that banks are not lending and people are not buying. That is what is stalling and stopping development. Until the Government listen, no progress can be made.
Drawing on my past as a member of a local authority planning committee—having been a councillor for 15 years, I sometimes find it hard to leave things behind—I know how committed councillors are when making planning decisions, how they can listen directly to local people and how local community groups or individuals often make representations about their planning concerns. What could be worse than, as might happen because of clause 1, a council that is deemed to be a failed council, whatever that might mean—we are still unsure about the definition—finding that its planning decisions are being taken away and swept off to either the Secretary of State or the Planning Inspectorate? How will the people who have been voted in to represent local people feel? How will local people feel when they have no right of appeal? It is that stark.
I have a further concern. The Planning Inspectorate makes household decisions within seven weeks and non- household decisions within 17 weeks, but local authorities make household decisions within eight weeks and non-household decisions within 13 weeks, and that is the case for more than 89% of councils. It seems that the majority are being punished for the failings of the few.
In relation to section 106 agreements and affordable housing, I have referred to the fact that in North Tyneside alone around 4,000 people are currently waiting for council housing. That does not include those who are hoping to buy and struggling to raise money to put down a deposit for a mortgage. I have constituents coming to me who simply cannot buy a house and cannot get affordable housing and so are looking to the council. However we define affordable housing, the need is as great, whether it is for someone looking for a house they can afford to buy or to rent. Taking away the housing element and the 106 agreements will leave those people even more desperate.
I spoke before about employee ownership, or share ownership as it is currently called. Many constituents have contacted me about that over the past week because they are so concerned about it, as well as about the rest of the Bill. They see what is wrong with it. They see how it undermines workers’ right and takes away women’s rights and carers’ rights to flexible working. I have stressed the need for training and the fact that it is not right that people will lose their right to training. Training enhances and helps companies grow in professionalism through personal development, and that can really make employers proud of their employees.
I have mentioned those three points. It is rather like someone going to confession to recite their sins for a period of time and saying, “That’s all I can remember, Father.” I am looking back at my time on the Bill Committee and in the House today, but it is not my sins that I am concerned about; it is the Government’s transgressions and what they are doing with the Bill. I hope that we reject it.
I thank everybody who has been involved in the scrutiny of this Bill, particularly my right hon. Friend the Member for Hazel Grove (Andrew Stunell) and my hon. Friend the Member for Burnley (Gordon Birtwistle).
I applaud the objectives of the Bill. We inevitably need a multi-pronged approach to achieving growth in the sort of economic climate that we are in at the moment. We have to work with the banking system to make credit available and to help first-time buyers. We need land to be available, although I do like to protect the green belt. We need the public sector land availability that my hon. Friend the Member for Colchester (Sir Bob Russell) mentioned. There is much more scope for that on the way, whether it be for infrastructure or for housing itself. We need investment from the Government, although the £10 billion contribution is most welcome, as is the direct £300 million.
Not so long ago, I was standing here arguing against regional spatial strategies. In a relatively short space of time, we have had the Localism Act 2011 and the national planning policy framework, which are really good steps forward. The Bill has brought about further debate on localism versus centralism, and it is important that we get the right balance. Today we have had some important reassurances, particularly on the designation of planning authorities, to say that there will be early intervention and support. It is very important to work with local authorities and local people, not in conflict with them. I am worried that we have not quite sorted out quantity and quality as regards planning decisions, but there is scope for more debate on that.
On section 106 agreements, we have had some reassurances about the transparency of any renegotiations and a really firm test of viability. I am also reassured by the time-limited aspect. We have all been calling for outstanding planning permissions to be implemented rather than developments going out into our green fields, so this time limit has potential. I am sure that we all care about affordable housing and mixed housing developments. We have to use all the tools at our disposal, not just in this Bill but right across Government.
I am concerned that the measures in the Bill should not be counter-productive. It will be important to have more scrutiny in the other place. It is also important that we all respond robustly and encourage others to take part in the many consultations that the hon. Member for City of Durham (Roberta Blackman-Woods) mentioned. I shall certainly be participating on behalf of the Liberal Democrats, and I hope that the listening process will continue.
I thank the Under-Secretary, my hon. Friend the Member for Grantham and Stamford (Nick Boles), for what he said about making sure that we have a much more open system for assessing the viability of applications for developments with affordable housing. We have lived in a world where people in communities such as mine have gone to their local authority and developers and asked why the case has been made for a reduction in the original plan for affordable housing, and they have been told that it is all confidential and nothing can be seen. The good news that comes from today’s debate is that the process will be much more visible and transparent. That was called for by Labour Front Benchers, and it was certainly undertaken by my hon. Friend.
I encourage Ministers to consider the fact that we absolutely need to respond to the demand out there in all our constituencies and to go on looking for new ways of finding more affordable housing. I do not think that there is a single constituency in England where there is not a huge demand for affordable housing, and we have pressures that the Government need to work out ways of resisting. In London, we have lots of purchases from abroad of land to be used primarily for marketing abroad, not for marketing at home. Foreign investors will buy to build and then leave the properties unoccupied. That is unacceptable. It forces up prices, it reduces availability, and it may be new housing but it is not new affordable housing. As my hon. Friend the Member for Colchester (Sir Bob Russell) said, public sector land, not only in Greater London but elsewhere, is not being brought back into use.
I hope that the Department for Communities and Local Government will work with the Department for Business, Innovation and Skills to realise the benefits of house building in terms of growth and jobs. It is one of the most certain ways of getting maximum numbers of jobs and apprenticeships into the economy. I hope that the Department will also work with our colleagues in the Treasury to make sure that we have a tax regime that incentivises people to develop brownfield land, not to sit on it. Too many sites in constituencies such as mine have been sitting idle and not used for anything for too long. People want affordable housing and imagination from the Department for Communities and Local Government, but I hope that this Bill is only the beginning of a development that produces far more affordable housing under this Government than was ever developed during five years of the Labour Government.
I did not come to this place just to be critical of a Labour Government who developed far fewer council properties than any preceding Government; I want to encourage this Government to make sure that they do better than our predecessors and develop homes that meet the aspirations of my constituents, who want housing that they can afford and who do not want the only available offer to be the ridiculous costs of some of the new housing currently being built.
Question put, That the Bill be now read a Third time.
Bill read the Third time and passed.