UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 1024-iv

House of COMMONS

MINUTES OF EVIDENCE

TAKEN BEFORE

OFFICE OF THE DEPUTY PRIME MINISTER:

HOUSING, PLANNING LOCAL GOVERNMENT AND THE REGIONS COMMITTEE

PLANNING GAIN SUPPLEMENT

Thursday 18 May 2006

YVETTE COOPER MP and JOHN HEALEY MP

Evidence heard in Public Questions 279 - 334

USE OF THE TRANSCRIPT

Oral Evidence

Taken before the Office of the Deputy Prime Minister:

Housing, Planning, Local Government and the Regions Committee

on Thursday 18 May 2006

Members present

Dr Phyllis Starkey, in the Chair

Mr Clive Betts

Lyn Brown

Mr Greg Hands

Mr Bill Olner

Alison Seabeck

________________

Witnesses: Yvette Cooper, a Member of the House, Minister for Housing and Planning, Department for Communities and Local Government; and John Healey, a Member of the House, Financial Secretary, HM Treasury, gave evidence.

Q279 Chair: Can I welcome you, Ministers, to this final session on our investigation into the planning gain supplement. Can I say right at the outset that we have only just received this document from the Department for Communities and Local Government, Valuing Planning Organisations in England, so clearly we have not read it and it is in any case embargoed. It may be that, when we have read it, we might wish to return to you with some more questions. We understand that Mr Healey has to leave, so we are going to be asking questions to begin with mainly relevant to the Treasury in order to make sure we have dealt with that and then obviously we will deal with other questions afterwards. If I can, therefore, start with a question to you, Mr Healey, it is about the rate of PGS. What will the PGS rate be, what do you consider a modest amount and how effectively can the implications and the consequences of the planning gain supplement be assessed without knowing the rate at which it is going to be set?

John Healey: Thank you, Dr Starkey. Can I just say, before answering those three questions you have posed in one, thanks for the invitation to give evidence; we welcome that, and we welcome the inquiry. We have got a great deal of work to do following around 800 responses to the consultation and the views of the Committee will help us in that respect. I do apologise that I have to leave. You know that I have to be at the Finance Bill Standing Committee at 1.45 and I know you did not want to change the time, so, if there are any questions specifically to me and the Treasury that Committee members do not get to ask in the time before I have to leave, I am very happy to write to the Committee on that basis. On the question of rate, we have said from the outset, and we are clear in the consultation document, that we are looking to set the rate at a modest level for two reasons. Firstly, we want to ensure that, if we introduce a planning gain supplement, and it is a proposal at the moment and no final decision has been taken on whether we introduce it and, if so, how precisely we do so, then the importance of the rate is to ensure that it does not affect the incentives to bring forward the supply of land for development in the first place. Secondly, we want to avoid the problems that perhaps predecessor-style supplements of this nature have encountered in the past, so we have been quite clear that we are not looking at anything like what have been punitive rates in the past of, perhaps some would say, similar approaches, and they have ranged from anything from 42 to 100 per cent. On the question of setting the rate, there are a number of components that we have to try and analyse in order that we can get anywhere close to assessing the right sort of level to propose if we go ahead with the planning gain supplement. Any decision on rate or any proposal on rate will interact with decisions and proposals on scope and on exemptions. They will need to be taken in the context of some of the macroeconomic factors that will affect the operation of any supplement, including the market in housing, the market in land, and that is work that we are doing at the moment and, as the Committee will know, we have confirmed that we will, and have undertaken to, make further announcements on the PGS by the end of the year.

Q280 Chair: Are you intending for there to be further rounds of consultation as you refine the PGS system, assuming you go ahead with it?

John Healey: We would confirm that, if we decide to go ahead, in any announcement by the end of the year. My own view is that we would have to, and want to, ensure that there is further consultation. At this point, I cannot say to the Committee whether that will appropriately be on the basis of draft legislation, proposed draft legislation or on the basis of further policy documents, but the principle that we would need, and would want, further consultation and views, including the opportunity for this Committee to have a further look if you chose, I think would be an essential part of any decision we might take to pursue a planning gain supplement.

Q281 Mr Hands: Specifically there are a couple of points on that. First of all, how exactly would we envisage the mechanism for changing the rates of planning gain supplement? Would it be something which would probably be looked to be potentially changed each year in the Budget or would it be more flexible than that in, say, a fast-moving property market, let us say, a situation like the early 1990s where values are moving around quite rapidly and you may need to bring down the planning gain supplement rate quite abruptly? How do you see the mechanism is likely to work on that?

John Healey: Well, you are tempting me to speculate and to move into an area which is quite well down the track. In principle and in practice, the Treasury, in this Government as in every Government, has kept every rate of every tax and the operation of every tax under review each year, so, to that extent, in principle we keep a very close eye on the way that it works. Secondly, this is not potentially a type of levy which I think one would compare, say, to excise duties which have, by tradition, been a form of tax which Chancellors have made decisions on an annual basis and for which a degree of inflation increase is often required, as in other taxes, to maintain their real value. This, in a sense, would not be a levy of that nature, so I would expect, particularly in the way that we would want it to work, that we would introduce it and want to ensure a degree of stability and certainty because of its potential impact in some long-term planning business investment decisions and markets, so I would not see it, if one likes, with that first general caveat that I suggested as the sort of thing that would lend itself to certainly annual change or of course any uprating.

Q282 Mr Hands: What about the scope for introducing a degree of independence in this? Have you looked at what other influences there are on, say, the housing market? Obviously one of the biggest influences in the past has been the Government setting of interest rates and the view was taken, correctly in my view, in 1997 to make that an independent decision-making process. What about the merits of making planning gain supplement a degree of independent, outside decision-making there?

John Healey: First of all, I welcome your endorsement of the Chancellor's decision to set up the Bank of England in that independent role. I think it has been an important part of the success and stability of the British economy over the last decade. I think I would answer it in this way: that, whenever we are considering questions of tax design or tax rates, we go out of our way to try and make sure that we get the views of experts, those affected who can contribute points of view which help us with the assessment that we need to take. In the end, however, it falls to the Treasury, and this is in part the nature of government, I think, that we, as politicians, ultimately elected and therefore accountable to a wider electorate and the public, have to make decisions which often balance a number of competing interests. In any tax decisions, the Treasury and the Chancellor have to weigh up a range of factors, a range of pressures and often quite competing interests. Now, in those circumstances, it is theoretically possible to franchise out that responsibility. It is not something that I would necessarily advocate and in the end I think it is part and parcel of the responsibility of government to make sure that we do the analysis, we gain the evidence, we give those affected or with an expert view the chance to contribute, but in the end somebody has to take those decisions and be accountable for their impact and their effect. That is properly a role, in my view, of elected politicians forming an elected government.

Q283 Mr Hands: Just more generally on PGS receipts, is it your intention to retain any proportion of PGS receipts for central government?

John Healey: What we said in the consultation, and amplified in the Budget, is that we essentially see this as a local measure, in part to ensure that local areas benefit and have the revenues required to build up the infrastructure where there is growth in their local communities, so we have said that a significant majority of the revenues will be devoted to the local authority area in which the PGS is raised. Clearly, if the principal purpose, as we have made clear again, is to support infrastructure development in order to support growth, then there is infrastructure that sometimes crosses local authority boundaries and may be of wider regional or sub-regional significance, so we have said that there may be a minority of the PGS revenues that could be applied at a regional level and that is the undertaking we have given.

Q284 Mr Hands: What about the costs of raising the PGS in the first place? Surely something would have to be offset against that and the central government costs of raising it?

John Healey: If we get the design of any PGS right, and I think we have been quite clear in looking at potential designs that we are looking for something, again, I suppose, learning some of the lessons of predecessor policies, that is essentially based on self-assessment, and developers and businesses are used to self-assessment, and which draws on the expertise we have already in the Valuation Office Agency who undertake 55-60,000 property valuations each year, and, if we set this up in a way which is simple, then the costs of administration, enforcement and compliance should be relatively modest.

Q285 Mr Hands: Will there be a clearly identifiable cash trail in all of this? Let us say, a certain amount is raised from a particular local authority in planning gain supplement over a particular year, will that figure be available versus what is given back to that authority in terms of resulting central government monies to fund infrastructure? In other words, will people be able to say, "Our authority's put in £100 million and got back only £80 million"?

John Healey: I think it is an important point, if I may say so, Mr Hands. It is a detail we have not made a decision on yet, but, if you take one step back to the principle that we set out here which is to say that one of our criticisms and concerns about section 106 is that it often is not transparent, it is not clear to local people what they have got from developments that may be taking place, then, if this is to function not just as a potential source of additional revenue that can be devoted to local infrastructure development, but also as something that local communities can see benefiting them directly, then clearly I think it means that we will have to find a way, although, as I say, we have not taken decisions on that sort of detail yet. We would have to find a way, I think, of making sure that it operated transparently so that it was obvious to those in any local authority area what the gains were from any potential developments that were given the go-ahead under the planning regime by their local planning authority.

Q286 Mr Hands: What scope do you see for there being a redistributive element in all of this, in being able to take back any supplement and move it towards more less advantaged and deprived areas?

John Healey: Well, there is an element of more flexibility for such redistribution, if that is the decision locally, than there is currently with section 106 which basically is site-specific. There is, for instance, the potential flexibility for a local authority area to be able to pool funds from PGS raised through their area to devote to particular necessary infrastructure they felt was important in their area, and they could choose to do that with their proportion of the significant majority of the PGS revenues that would flow. There is potential also for using a portion of the PGS revenues on a regional basis where there are important infrastructure developments that may help unlock further growth potential, but, above all, I think the important thing here is that it is principally a local measure and, secondly, that it is something we have been very clear that is devoted to the development of infrastructure that is necessary to support the growth of housing and local communities.

Q287 Mr Hands: I have two very quick questions on section 106. You said in the consultation document that you are expecting more money to go to local government overall through PGS than through section 106. Would that be every local authority or will some be more likely to benefit than others?

Yvette Cooper: I would apologise, first of all, Chair, for the fact that you have only just received the research on section 106 today and we should have probably sent it to you in time for you to grill us on it, but it does raise some interesting issues which I think will help us to be able to answer that over the long term. I think you would expect most areas to be seeing something of an increase overall in the resources that they would get because, if you look at the section 106 research that we have sent you, what it shows is that on a very large number of sites there are no section 106 agreements at all. For example, even though the proportion of sites with section 106 agreements has increased since 1997, 60 per cent of residential developments of more than ten homes still do not include section 106 agreements, 90 per cent of smaller residential developments do not include section 106 agreements and some of the calculations we have done on the basis of this would estimate that, out of around 140,000 homes built in 2003/04, over 95,000 were built on sites without section 106 agreements. Therefore, there are a considerable number of sites on which planning gain takes place, so there are planning gains, but at the moment there are no section 106 agreements, so that evidence, I think, would strongly suggest that there is a tax base out there within every local authority, whether it is planning gain that is taking place, which is not tapped into by the current system.

John Healey: The short answer to your question is that you cannot say that in the short term every local authority will gain from this because the current situation, as Yvette Cooper has said, is extremely patchy, but overall there will be net additional revenues available and hypothecated to infrastructure development at the local and regional level. Finally, and importantly, we have made clear that any PGS revenues to local government and local authority areas will be in addition to, and separate from, the local authority settlements.

Q288 Mr Hands: Just on transparency, you mentioned that you thought that PGS would be more transparent than section 106 agreements, but there is little that can be more transparent than section 106 agreements: the development is granted, planning permission is given and, in return, up pops the local park, the local school, the local transport development, et cetera, and everybody says, "Thank you" to Chelsea Village or whoever it was who provided that particular new facility. What can be more transparent than that?

John Healey: I am not sure whether you have had a particularly excellent council up until very recently in Hammersmith and Fulham which does not operate like elsewhere, but generally a very common criticism that all of us, as local Members, come across is that there is not, for local people, often a very great clarity about how section 106 operates. It depends very much on how skilled the local authority planning department often is at negotiating those and it is a common criticism actually from all quarters or certainly a common perception that section 106 can often serve as a form of somehow buying and selling planning permissions which is not terribly opaque, and I think one of the advantages of the planning gain system would be that it would be clearer and it could be more transparent.

Q289 Mr Betts: Section 106 is still going to be allowed for affordable housing on housing sites. Does that mean that the contributions towards affordable housing under the new system will remain the same as they are now or are you going to encourage or allow for an extra element from PGS revenue to fund affordable housing as well as the 106 contributions?

Yvette Cooper: We are doing some further work on the interaction between scaled-back section 106, which is what we would envisage, and a potential PGS and, in particular, looking at what the impact would be on affordable housing. At the moment the research that we sent you suggests that the value of planning obligations that were agreed for affordable housing in 2003/04 was £1.2 billion and the amount that was actually delivered in that year was £600 million, and there is a series of possible reasons, but no certainty as to why there is such a gap between those two figures. What we want to do, I think, is to look further at what the interaction might be. What we are clear about is that we need to keep on delivering affordable housing and actually we need to be able to increase the affordable housing that we deliver. We think there may be a lot of potential in many areas to deliver more affordable housing and, for example, we have just responded to the Rural Housing Commission's report looking at the issue of the amount of affordable housing that comes through planning obligations in rural areas, and there is some significant evidence to suggest that we could get rather more affordable housing out of planning obligations, out of section 106 agreements effectively, within rural areas compared to what is coming through the system at the moment. We are clear that we want to increase the delivery of affordable housing, however, what we want to look further at, and we are doing some further work on at the moment, is exactly what the interaction would be between a section 106 approach and the PGS approach. We made the decision to keep affordable housing within the section 106 approach because in practice you really want it to be considered as an onsite delivery. If you are going to deliver mixed communities, you want affordable housing to be built into the developer's attitude and conception of the site from the very beginning. That was why we thought it would be more appropriate to deliver affordable housing through the section 106 route rather than taking it out of section 106 and putting it into PGS instead.

Q290 Mr Betts: I am interested in the interaction because presumably it depends on whether the section 106 is negotiated and the planning gain is then somehow levied on the residual value which remains, or whether, in fact, you have a planning gain supplement and then you negotiate what you can out of the 106, the planning gain supplement having already been paid.

Yvette Cooper: Section 106 would take place first.

Q291 Mr Betts: It is a residual element?

Yvette Cooper: Yes, but the Planning Use Value would be calculated after the section 106 agreement had taken place.

Q292 Mr Betts: Presumably there is going to be a great incentive for most authorities to try and maximise their section 106 which is going to come to them rather than leave anything left for planning gain which might go somewhere else, or at least a percentage of it, in the process?

Yvette Cooper: We did register that point as part of the consultation document and that there might be a need to look further at the approach to affordable housing taken by local authorities, so you had some consistency and you did not end up with perverse incentives causing problems. Bear in mind, if you have a very transparent approach to the PGS, local authorities will also know what their infrastructure requirements are in their area and also what the consequences will be for PGS and the consequent resources they are likely to get from PGS for infrastructure as well. Local authorities will have to take a series of judgments about this. I cannot give you a conclusive answer at this stage because it is exactly one of the areas which we are looking at. I do recognise the point you are making and it is exactly why we are doing more research into it.

Q293 Mr Betts: Is one of the intentions of the whole approach, as I understand it, to try and simplify arrangements? Would it not have been easier to try and improve the operation of 106 by indicating your methods of good practice to those authorities that are already going to operate them, say at least on housing sites, and not have a complicated dual arrangement on those sites in the future?

Yvette Cooper: You could take that approach. We have looked at that and that is why I think the research we have sent to you is quite interesting on this. What it does show is even where you have got the residential developments of more than ten homes, you have still got only 60 per cent of those having section 106 agreements in place. We have a large number of homes that are delivered on very small sites where there are very rarely any section 106 agreements that are to take place. Ninety per cent of them do not have section 106 agreements in place. To apply section 106 agreements to all of those sites would be adding an additional process of negotiation into a very large number of sites, where we think the idea of a planning gain supplement, which is something that is very simple, to such a wide number of sites would be the simplest way of being able to capture planning gain on what are a very large number of very small sites, but each of which will have some significant planning gain in them and, therefore, could be captured through a planning gain supplement much more easily and much more smoothly than having a huge expansion of section 106 agreements. The other factor about section 106 agreements is that there are a whole series of conditions currently attached to section 106 agreements. They are about negotiations, about the site needs and so on, so clearly you would need to substantially change the section 106 agreement process if you were to do that. I think the conclusion that we came to, the reason we decided to consult on the PGS, was because it was really felt that having an approach that provided some clarity for developers, and some clarity for local authorities, which could be smooth and simple would be better than a huge number of individually negotiated deals on a very large number of relatively small sites.

John Healey: We are consulting on the proposal for a planning gain supplement following the recommendations which Kate Barker set out. In her report - and I know you studied that very carefully, Mr Betts - she looked at the other possible mechanisms. She looked at VAT on greenfield sites, at section 106 and at capital gains tax as well, and in the end came to the conclusion that she thought the concept of the planning gain supplement was likely to be the fairest and most efficient way of capturing what she called the unearned gains from selling land for development.

Q294 Mr Betts: We had the Home Builders' Federation in front of us the other day. We probably take it as a given, as I am sure you do, Minister, that most potential taxpayers would rather pay less tax than more, so you take their submission probably with at least regard to that as an issue. They were saying a couple of things to us. Firstly, there were major difficulties with section 106, they felt it was inconsistent and complex. They were saying, "We are still going to have the inconsistencies and complexities because we are still going to have the 106". They welcomed the principle of planning gain supplement because they could see, of itself, it might be simpler, but then went on to say that they thought the whole issue of the way valuations would be done on the Current Use Value and Planning Value was virtually impossible to work, in their view. They thought the clauses were unworkable and would delay house building and make it more difficult to get planning permissions through. They had not got any alternatives because they recognise that they have not got a scheme which works either. Are you concerned about that evidence we received?

John Healey: I have not looked at their evidence, but on the specific point about unworkability, it is the case that developers already obtain valuations on the land that they are using, and they do that as part of their normal business planning and investment and they do it as part of their procedures. I have explained also how in government we are involved with businesses of all types, including developers, in regularly checking valuations of property and land as part of other tax regimes. I will certainly take a look at their evidence, but without being clear from you what their particular objections are and why they do not think it is workable, then it is quite difficult to answer that question. We will certainly take a look at it.

Q295 Mr Betts: One of the issues they did raise with us was about the complexities of arrangements that are done between owners of land and developers, particularly options, whereby you could end up taxing the costs of getting the land fit for development as part of those arrangements. They were arguing very strongly about the need for transition arrangements which would allow for a period of time when those options perhaps would not be taxed at PGS. Then they went on to point out that some of those options on land could take from 15 to 20 years to come to the point where they were ready for development and get planning permission. Is that not a real problem?

John Healey: First of all, we are looking at the role of options in the current land and development market, secondly, we are considering, as we indicated in the consultation, the question of transition arrangements, and, thirdly, what we want to ensure we do not do with any potential planning gain supplement is introduce a system which discourages the sort of remediation and land preparation which has to take place on some sites before you can get to the point where they become viable for development.

Q296 Mr Betts: You are going to look at a transitional period, and you are going to consult on that?

John Healey: We are looking at the whole area of whether or not, and in what circumstances, transitional arrangements might be appropriate. As I said at the start, this is work in progress, there is a huge amount of ground we have still got to cover and we aim to do much of this in order to be able to make further announcements by the end of the year.

Q297 Alison Seabeck: I have been listening to your comments on VAT and PGS. Originally I think you were in favour of a national single figure for the PGS. Kate Barker's rationale rather preferred the potential for regional variations. Are you softening on that view in light of the responses to the consultation?

John Healey: We asked in the consultation whether there was a case for an exemption or a reduced rate for brownfield sites. We do have quite an important starting point, which is to try and make this as simple and as comprehensive as possible. It is likely to be an advantage to developers, to local communities and their authorities, and to us in trying to administer this. The whole question of the detailed design of this is what we are working through now as we work through the 800-odd responses that we had in the consultation. We are doing so also in further detailed work with many of the bodies that have got expertise to help us with this.

Q298 Alison Seabeck: Is your evidence suggesting that PGS could levy more than the potential £1.3 billion that VAT might levy?

John Healey: We have said from the outset that our intention is to see any PGS as producing net additional revenue over what currently is delivered by section 106 in order that we can then contribute to the additional infrastructure costs which are required to support the growth; that is a purpose behind the proposal and very clearly so. Chair, can I caution the Committee not simply to be looking at PGS in isolation, there is clearly a potential planning gain supplement for us and it is being considered also in the context of the package of commitments we gave at the Pre-Budget Report and, also, in particular, alongside work we are doing in the cross-cutting review as part of our preparations for the Comprehensive Spending Review. If the Committee would find that helpful, I would welcome the opportunity to give the Committee a note on that cross-cutter because I think it helps set the context for the planning gain supplement and probably will help keep this proposal in perspective and be of more general interest to your work.

Q299 Chair: I think that would be extremely helpful, Mr Healey. I am conscious of the time, but just before you go there is one more issue which would be useful to have your view on. It is the extent to which the Treasury is prepared to forward-fund some of the infrastructure costs, then recovering the costs afterwards, either regionally or locally, through the planning gain supplement. Obviously the Milton Keynes tariff is an example of this where there is forward-funding. Can you give us an indication of the extent to which the Treasury might be considering such forward-funding?

John Healey: Of course, it was the Treasury that gave English Partnerships the go-ahead to forward-fund in Milton Keynes, which indicates to you that we recognise this is an important part of local authorities and local areas being able to see the development infrastructure they need to support the growth. In a sense, it picks up the point I just made about the cross-cutter and the broader issue because the solution is not necessarily strongly to be found within the potential for a planning gain supplement system. However, within a planning gain supplement there is clearly - and we touched on this a moment ago with Mr Hands - some flexibility within a local authority area for pooling PGS revenues, for being able to use those to forward-fund infrastructure in areas which may not be related to the specific sites that PGS has been raised on. Secondly, there is a potential that we are looking at further and it may be of interest to the Committee. If PGS provide a revenue stream for local areas and local authorities, then clearly there is the capacity to look at using those as part of the prudential borrowing regime. Clearly that might be a mechanism for raising some of the capital that might be required for the forward-funding of infrastructure needs.

Q300 Chairman: Minister, we will probably have to let you go to your committee.

John Healey: If there are any further questions, particularly to me, then I would be delighted to answer them and I am happy to do so now. Thank you very much.

Q301 Chairman: I suspect there will be quite a few. Thank you very much. Minister, I am sorry to have kept you waiting. Can we go back to one of the points that we have explored slightly before. How important do you think it is that there is a visible link between the places where the funds are generated and where they are spent?

Yvette Cooper: I think that is why we have said we think the majority needs to go back to those local authority areas, that there is very considerable advantage to people feeling that the resources that are raised, the planning gain that comes from having new developments, new houses in that area, are also used to benefit that local community. We do also know that within an individual local authority area there might be a greenfield site where there is a very high planning gain, for example, but only a limited infrastructure requirement, and very close by a brownfield site with some very difficult remediation costs or some infrastructure requirements. Therefore, we think local authorities should be able to have the flexibility to look at using gains from one site to have an impact on another and to use the infrastructure for another as well. It is because we think there is very considerable value in the sense of local communities themselves being able to share in the planning gain within that area, which is a result of growing the local community and providing additional houses or additional development, which is why we have said that we want the link to be very clearly to those local authority areas.

Q302 Mr Olner: Being one of these elderly ones who can remember the Community Land Tax many, many years ago and it failed basically because of the exemptions that were given then. Have you any views on whether and what land should be exempt from the planning gain supplement? In your own mind, do you see a differential between planning gain on land that is used for residential and land that is used for industrial or commercial?

Yvette Cooper: We propose that it should apply to all kinds of land rather than simply to residential, partly because we thought it was important not to distort the market, not to have a distortion and an incentive to use land in one particular way rather than another. Therefore, that was the reason for applying a PGS approach across the board, but obviously that is something which we are consulting on. As part of the consultation we also raised the potential to have a different rate for greenfield and for brownfield sites. Again, that is something where we are looking at the consultation responses. The reason for this - which was something that Kate Barker had also considered - was if we want to continue to prioritise brownfield land, and given that we also know that there can be additional remediation costs and additional costs which need to be taken into account for brownfield land, therefore having differential rates might be a good way to promote the brownfields development further. Therefore, that was something we thought we should consult on. There have been a series of exemptions which have been proposed in some of the responses to the consultation. We have not proposed specific further exemptions because we thought the approach should be as simple and as broad-brush as possible, but obviously we will consider the responses to the consultation.

Q303 Mr Betts: You mentioned previously, Minister, the estimates you have done and I was slightly surprised - I think I have got the figures right - that 1.2 billion has been negotiated in section 106 agreements but only £600 million has been spent as a result of them. Have you got any estimates, therefore, as to what the figures will be under a changed arrangement? For example, how much less will be the scale of such section 106 arrangements compared with what they currently are and how much more will be raised through PGS as a replacement or, indeed, as an additional revenue stream?

Yvette Cooper: The figures I gave you, the 1.2 billion and the 600 million, were just for affordable housing. That was just the section 106s for affordable housing. Obviously we have said that affordable housing will continue to be in the revised section 106. This is for 2003-04 and obviously it will vary from year-to-year depending on development new build levels in that year. The total value of planning obligations was 1.9 billion in 2003-04, of which 1.1 billion was actually delivered. The 1.9 billion was what was agreed in planning applications and 1.1 billion was what was delivered through planning obligations. At this point we have not got a figure for what a revised section 106 would gather because that depends on a whole series of further estimates about exactly the way in which you draw up a revised restricted section 106 as well as a whole series of other estimates and assumptions about PGS as well. It is something that we are working on.

Q304 Mr Betts: If you are going to retain section 106 for affordable housing then presumably one could assume that the affordable housing revenue in the future will be no less than it is now and, indeed, by encouraging those authorities which do not pursue it to pursue it in the future there will be an increase. Is that your intention?

Yvette Cooper: I do not think that is an unreasonable assumption but, equally, what I cannot say at this stage is exactly what figures we will be working to because it is a work in progress.

Q305 Mr Betts: It is rather peculiar, is it not, that we will be keeping section 106 in place for affordable housing when it looks as though the delivery of affordable housing is running at about 50 per cent of what was agreed and the rest of section 106, therefore, comes to about 700,000 a year, of which 500,000 is delivered, so the delivery rate is actually higher on that element you are proposing to scrap.

Yvette Cooper: I think this raises some very interesting further questions and this is why I am not able to give you definitive answers at this stage. We are in the process of looking a lot further at what the consequences might be for affordable housing delivery. You could make the argument that affordable housing should come out of this, affordable housing should all be done through PGS, you could take that approach, but the reason we did not was because we felt that affordable housing was so important we did not want to do anything where in transitional arrangements there might be any risks to affordable housing, but also in particular because of this idea that we do want developers to think of affordable housing as being part of the costs of their delivery, part of what they should be doing on those sites because they should be building mixed communities and in those mixed communities they should be including affordable housing. Rather than seeing affordable housing as something which is a bill they have to pay that is separate from them, that is not an obligation on them, that goes through and ends up with the authority, they should have some responsibility for delivering affording housing on their site and that should be inbuilt into the process. Those were the thoughts behind affordable housing. The tenor of your question is can we be confident about delivery levels and what is going to happen in terms of delivery of affordable housing. We are very conscious of that and our clear aim in this is to make sure that over time we are able to increase the delivery of affordable housing, so that is a fairly important question that is driving the additional work and research that we are doing.

Q306 Lyn Brown: Given that affordable housing provides for difficult and lengthy section 106 negotiations, and you are retaining this in the scope of your planning applications, how do you think PGS will result in a faster and more efficient planning process?

Yvette Cooper: It will take other things out. It will take some of the offsite issues out of the section 106 agreement. It might be possible to better smooth the process of agreeing affordable housing in section 106s as well and that might be something you could look at as part of this whole debate. We do raise the issue in the planning consultation and in the consultation on the planning gain supplement about whether we should have a more standardised approach to the provision of affordable housing as part of revised section 106 agreements. That is something we are looking at as part of this.

Q307 Lyn Brown: We have had witnesses who have argued that PGS will make marginal projects more unviable and thwart your intention of increasing housing supply. Do you agree with that analysis? If you do not, what is your evidence base?

Yvette Cooper: Kate Barker's interest in the planning gain supplement from the beginning was that it was value sensitive. If you have a site on which there is not much gain through the planning system because of the marginality of the project, because of the costs, the remediation requirements, for example, for a brownfield site, the complexity of the site and so on, or because of what it was used for before, maybe it was already used for a whole series of commercial or retail developments or housing and residential developments, and maybe for all sorts of reasons there is hardly any gain through the planning system, under those circumstances as a result there will be hardly any planning gain supplement paid. The benefit of the PGS approach is that the amount that is paid is proportionate to the value uplift as a result of the planning system. Given that the planning system itself imposes value on sites, it is because we have a value system that the values of a lot of sites are what they are and without the planning system the value would be completely different, and given that it is the planning system that creates a lot of that value it therefore seems appropriate that a proportionate share of that increase in value should be shared by the local communities as well.

Q308 Mr Betts: Have you made any estimates as to how much revenue you think you could raise from the new system without causing land-banking and actually reducing that amount of development?

Yvette Cooper: Work is being done at the moment to look at different revenue consequences and that sort of modelling, so that work is underway at the moment. Also, what you need to look at is what the impact is on development and so on. That work is underway and will inform the decisions that are taken.

Q309 Mr Hands: I have two questions. First of all, all of your talk is about value uplift in the market but has any consideration been given to what would happen if property prices, land values, were in a downturn? In such a scenario the UK would almost certainly be in a recession, or about to enter a recession. If a lot of the infrastructure development that you have got proposed is dependent on planning gain supplement to finance it and it suddenly dried up because there no longer was any value uplift, at precisely the same time as Britain would need infrastructure development to avert the costs of the recession do you not see that being a potential danger that Britain could effectively grind to a developmental halt at that time?

Yvette Cooper: Obviously the first thing to say is we should all be grateful for those critical decisions, that I know you supported, to make the Bank of England independent and the greater stability that we have had in the property market as well as the market overall. The second thing to point out is that the planning gain is not based on long-term market increases in the value of land, it is based on the increase in value that takes place as a result of the planning system. So it is the comparison between the current use value under the current market conditions and the planning use value under the current market conditions. It is not like capital gains tax, for example. It is not based on what happens to a piece of property or a piece of land during the market. It is based on the difference that takes place as a result of a planning system. You can envisage ways in which market conditions might affect that but, nevertheless, it is the planning system that increases value at every point in the market whatever the market conditions might be, so therefore it would be less cyclical than you were initially suggesting.

Q310 Mr Hands: Nevertheless, if you take a scenario like the early 1990s or the mid 1970s your planning gain would have been very, very small, minimal if anything, compared to the infrastructure needs or the desire to reflate the economy.

Yvette Cooper: If you think about the difference in value between agricultural land and residential land - those are the most obvious extremes - where agricultural land at the moment in current use is something like £9,000 per hectare and residential use is currently around £2.4 per hectare, that is a pretty massive gap. Whatever position you are in in the cycle you are still going to have a very significant gap between agricultural land value and residential land value. There are cyclical factors that always have to be taken into account in tax systems, are there not? There are cyclical factors that always have to be taken into account in the fiscal decisions that governments make. That is why we have the fiscal rules which are all about managing expenditure over the cycle. You always have to take those sorts of things into account. I think this is less cyclical than you are suggesting for exactly the reasons that I have suggested, but to the extent that any income is cyclical then those are the sorts of decisions that treasuries always take into account.

Q311 Mr Hands: My understanding of this system would be that it probably could not be introduced before about the year 2008 and obviously at that time we are working on the assumption that we will be approaching a General Election. If another political party were to pledge to abolish the PGS system is there not a risk that you could bring all development to a halt for one or two years while land-banking went on because developers would figure they were better off waiting until the result of an election?

Yvette Cooper: We said in the consultation that the earliest that we could introduce this would be 2008, not least because of the amount of work that we need to do in advance but also because of the issues around transition that need to be taken very seriously as well. I think it would be very unwise for an opposition party to pledge to reverse a PGS or to get rid of a PGS given that the opposition parties are now, at least in theory, committed to increasing the level of housing across the country and recognising that there is huge need for additional homes across the country. Frankly, the infrastructure for those homes has to be funded somehow and you will have to get the resources from somewhere.

Q312 Lyn Brown: Given that PGS has the potential to create fairly good revenue streams for local authorities, do you think there is a risk that local authorities will favour developments that will produce a higher monetary yield rather than other developments that might be more important for sustainable communities, for instance things like sports facilities? How might you ensure this does not happen? Given that things like leisure and sports facilities are so important to sustainable communities, do you think they should be included in regional spatial development plans or local development plans?

Yvette Cooper: To the extent that PGS becomes an incentive to take one decision rather than another, you could argue that section 106s would have the same effect. Ultimately, local authorities have to take responsible decisions in the interests of the whole community and they are democratically accountable for those decisions anyway, so they ought to be able to take account of there are much needed sports facilities and so on, and not end up rejecting applications for those on the wrong basis. To the extent that sports and recreation ought to be part of other planning systems and planning strategies, if I may I would like to think about that further and write to you.

Q313 Lyn Brown: Can I take you a little bit further on that. Thank you for that answer. Sport England created a system whereby they came up with a figure of how many swimming pools per population were needed. Do you think that within the sustainable communities development programme, given the complexities of the section 106 and PGS, we might look at a system that took that methodology and applied it to other leisure and sporting facilities for communities so that a local authority has a yardstick against which to judge whether or not the decisions they were taking with regard to planning permissions and planning applications were, in fact, in the best interests of their communities?

Yvette Cooper: I do not know the detail of the Sport England research, so what I will do is look at that before I write to you on the issue. We do build into the planning system obligations for green spaces and open spaces. I have been advised that the practice guidance that we are drawing up on section 106 supports the Sport England approach.

Q314 Lyn Brown: Excellent.

Yvette Cooper: A nice simple answer. I will write to you further about it. We do already have much more detailed planning guidance, however, about the issue of open space, sports playing fields and things like that. That is already strongly embedded in one of the main policy statements. The only other thing I would add is that with some of the investment for growth areas we are funding sports and leisure facilities as well.

Lyn Brown: Fabulous. I will just say that sports and leisure includes culture as well.

Q315 Alison Seabeck: I want to ask a question about the Communities Infrastructure Fund. In Barker it talks about what is the entitlement at local level that goes into the Communities Infrastructure Fund. Can you give us some reassurance that this will be additional money and there will not be a government sleight of hand where PGS goes in but actually the level of funding does not increase?

Yvette Cooper: We only set up the Communities Infrastructure Fund on a short-term basis. It is a £200 million short-term fund. We have not set out a long-term future for the Communities Infrastructure Fund. What we have been clear about from the very beginning of this is this is about funding the additional homes that we need and increasing the number of homes from around 150,000 a year to 200,000 a year by 2016. That requires additional investment on top of what we are investing at the moment, on top of the funding that the Government is putting in and on top of the funding that section 106 is putting in. What we have been clear about is that the overall funding for infrastructure will need to increase. How much of that comes through PGS and how much of that comes through Communities Infrastructure is not something that we would be in a position to say at this stage. It will depend on how much you are able to raise through PGS and what alternatives there might be as well.

Q316 Alison Seabeck: That is an interesting answer but in terms of the infrastructure who is going to arbitrate on this fund? Roads are required all round the country, are government departments going to be at war with each other? Will the CIF, or whoever, be at war with the Department for Transport over who pays for which bit of road? Is there any clarified thinking on how the non-local funding will be dealt with?

Yvette Cooper: On the CIF that we have run so far, which is resources supplied by the Treasury, the £200 million, the decisions have been made by the former Office of the Deputy Prime Minister and our department with the Department for Transport. They have been made on the basis of really looking at which were the most important strategic pieces of infrastructure that were needed to support the additional homes. It was predominantly about the growth areas that have been identified and homes that were needed. There were broad criteria for making those decisions. Clearly you need to continue to do that. Potentially, however, there are other things you need to look at like what the role of the regional bodies might be taking a view about priorities. You ought to have far more of a sense of prioritisation at both the sub-regional and regional levels about where the most important needs for investment might be. We are having discussions on the Thames Gateway as part of the Thames Gateway Strategic Forum where all of the local authorities involved in the Thames Gateway, all of the UDCs and different agencies involved in the Thames Gateway, are coming together to try and have a much clearer sense of their priorities across the Gateway for the infrastructure rather than it simply being Government taking decisions on the basis of the bids that come in. To be honest, the more you can get that kind of local centred prioritisation, either a sub-regional or regional sense of prioritisation, you will be far more effective in terms of allocating funding.

Q317 Mr Betts: If we bring the new system in, replacing the traditional section 106 with an amalgamated form of some kind, it is quite possible on some sites that the amount of planning gain captured for the public good will be different from what it would have been under the old system. In terms of how that would operate in practice, presumably any site with planning permission already given when the new system comes in would have to abide by whatever agreements had been reached on 106 and there would not be a planning gain supplement. At some point if that land was not developed after three years the planning permission would lapse, as I understand it, and now it is not automatically renewable. Would it be the case that if the site was put up for planning permission again it would be subject to the new regime which had come in in the meantime?

Yvette Cooper: A lot of this will depend on what transitional arrangements were put in place. The principle of any approach you would take is if the PGS applies at the point at which planning permission is granted then obviously previous planning permissions have been granted in advance of that regime and, therefore, would not be covered. In the situation you are describing of having to go through the process again, clearly it would depend on what transitional arrangements were in place. There is a whole series of things you have to work through with the transitional arrangements: how do you treat things where you have got options; how do you treat things where you have got hope value built into previous decisions to buy land. Kate Barker's analysis was that in the long-term the impact of the PGS would be passed on to the landowner because of the way in which the planning system works. What you need to do is to look in the transitional period exactly how that would work.

Q318 Mr Betts: Could I come on to the point you were raising a minute ago. I think most people have sympathy with the idea of trying to keep things local or at least sub-regional so there is a relationship between the development and the resources raised. Clearly you can identify parts of the country where there is a mismatch between the potential to raise resources through planning gain, perhaps because of fairly low land values, and the need to build infrastructure. When they came to see us English Partnerships said that they saw a major role for them in helping and assisting in that sort of situation. Do you see that continuing and, if so, do you see the resources for English Partnerships to do that coming from the planning gain supplement or from somewhere else?

Yvette Cooper: I think it depends what you are talking about. If the argument is that there is some regional infrastructure needed that is important for regional economic development, for example, which would not come out of planning gain from housing then you might be looking at whether it is through English Partnerships or Regional Development Agencies or different sources of funding if you were making a different kind of argument as to why the infrastructure was needed. The only thing that it is possible to say at this stage is that we are looking at the planning gain supplement alongside the cross-cutting spending review. As well as looking at what the different consequences might be of different kinds of approaches to a PGS and where the resources might be raised, we are also looking at where the infrastructure needs are. Broadly, the evidence is that the infrastructure needs, particularly for new homes, are in the areas where land values are highest because those are the areas where demand is greatest so broadly, even at this stage, it is possible to identify quite a strong correlation between infrastructure requirements and the needs in terms of the new homes for the future. We are doing a lot more detailed assessment of that and we are looking at that alongside the wider spending review decisions as well.

Q319 Mr Betts: The concern then would be that, therefore, you have a demand led process whereby there is demand for new homes in the South so infrastructure follows. I am not saying some of that should not happen but just take the coalfields area of the Dearne Valley, spending more on infrastructure in terms of communication and links to the nearby job centres in Sheffield or Leeds might promote the desirability of those areas to build new homes in.

Yvette Cooper: Which is why I think you are talking about other kinds of bodies there as well, things like the Regional Development Agencies. You are talking about regional development and a wider issue than simply about the needs for infrastructure for new homes.

Q320 Mr Betts: One issue that has been raised in relation to that has been dealing with brownfield sites that might exist in those areas having a different rate of planning gain supplement, perhaps a lower rate for brownfield sites or sites that are contaminated land, than there would be for greenfield sites. Is that something that is in your consideration?

Yvette Cooper: It is definitely something that is in our consideration. We have had a lot of consultation responses on that. What we have not yet done is reviewed all of the consultation responses and come to any conclusions, but it is clearly something we want to consider, should we do a different rate for brownfield and greenfield.

Q321 Mr Betts: Presumably you considered the point that there should not be a tax on any land with a negative value where the planning gain brings it up to a nil value?

Yvette Cooper: I think that is probably at a level of complexity that I am sure if John were here he would be able to answer easily, but perhaps we will ask him to write to you on that.

Q322 Mr Olner: Just a quick question, Minister, and it touches on the answers you have given. Given that there are a number of agencies, Regional Development Agencies, city councils, shire councils and what have you, and all have an input into determining the priorities of what infrastructure is needed, could I ask are the regional offices going to sift these priorities as they do now and stack them up so that they can get government funding? I am fearful that there will be a huge, huge temptation not to look at this money as additional money for doing infrastructure. I am rather frightened that it is going to go into the black hole in the Treasury and not come out to help specific projects.

Yvette Cooper: The reason for us coming up with the PGS in the first place was because Kate Barker recommended it as a way to fund the additional homes we need. We need the additional homes. We have to build the extra homes for all of the issues that we have discussed as part of your other inquiry.

Q323 Mr Olner: I do not have any problem with that, Minister, but ----

Yvette Cooper: I do not think we can do the homes unless we do the infrastructure.

Q324 Mr Olner: Exactly.

Yvette Cooper: It is not going to be possible. Given that we are clear on our commitment to deliver the extra homes, we are going to have to come up with the investment for the infrastructure. That is why I think there is a strong disincentive on the Government and on everybody else to see this as just replacing other resources. We have made it very clear from the very beginning that we need this to provide additional resources for that infrastructure.

Q325 Chair: Minister, can I just press you on a question that we have explored before, which is about the mismatch between when the housing development occurs and when the money comes through to pay for the enabling infrastructure or the infrastructure that is required in parallel. Could you explain how the local authority will get the money if it has to come through being paid through a central fund and coming back again and how that will be delivered on time? I think this takes us back to the forward-funding question again.

Yvette Cooper: We have not set out any precise mechanisms about the way in which the resources would flow through or what the timings of the processes would be and obviously that is the kind of thing you have to work up. If you are going to take the PGS forward you have to do that sort of detailed design and consult on the way in which that would work as well. If you have a transparent process and you know what it is that is coming and if you know the way in which it is going to work then that does give you all sorts of flexibility to use potential borrowing, to use other routes, to be able to make sure the infrastructure is there on time. Also, if you have a situation where you have a PGS that has been in place for, say, five to ten years then you have got a resource of money that is coming through a PGS process in a rolling way so that also gives you considerable flexibility. There may be issues in transition that you may have to look at but, again, that is another question about how transitional arrangements would work.

Q326 Alison Seabeck: I want to follow up on the point the Chair made in relation to a successful section 106. If you look at the Greenwich Millennium Village which negotiated the 106 way back in 1999 when the Dome was built, in that deal the road junctions were put in place for potential future housing, the bus terminuses were put in. Potentially section 106 can achieve what you are doing through PGS. In a sense, I would like the assurance that you have not entirely ruled out how you improve and get better use of 106s if PGS does not stack up.

Yvette Cooper: We are very genuinely consulting on this and looking at all of the responses that have taken place. We have not taken firm decisions in terms of this process at all, we are genuinely looking at all of the different alternatives. All I would say on that is you are right, you can get some excellent results from section 106 processes and there are some local authorities who are brilliant at it. Greenwich has been particularly good at doing section 106 deals on very big sites. The thing that is very interesting about the research we have just sent you is how many homes and developments are coming through on small sites. I think part of the explanation for some of the responses we have had is that people are still thinking in terms of the big sites where they have experienced section 106s and how the PGS applies to those sites. Yes, that does raise a series of important questions and you have to think that through but also you have to think through how PGS would apply to the majority of sites where you are getting no section 106 arrangements at all. I think there are serious questions about our ability to do section 106 agreements on all of those sites because many of them will be small and, therefore, a section 106 process will be much more cumbersome than a simple PGS process. Yes, you are right, there are some very good things about the section 106 process that you would not want to lose and, yes, there are some sites on which section 106s have been very successful, but there also a huge number of alternative sites where we are not capturing any planning gain at all.

Q327 Chair: Can I just follow that up. Are you considering a hybrid system where, for example, you might have a variant on the infrastructure tariff system on very large new developments but PGS as a backstop for everybody else?

Yvette Cooper: The main approach that we are working on is the one that we have consulted on. That is our central proposal and that is what we believe at this stage would be the best way forward. As I said, we are going through the consultation responses in some detail. As you know, we have already set out proposals for an optional planning charge as an alternative and we have looked at that as well. For many of the reasons that John and I have both given, we do think that the planning gain supplement has the greatest advantages of all of the alternatives. There are issues in the interim as well. One of the reasons we wanted to promote the Milton Keynes tariff approach is there are an awful lot of growth areas where a lot of planning decisions will have been taken by the time the PGS could come in where consents will have been given and the tariff approach may be extremely useful in the interim regardless of what decisions are taken about PGS.

Q328 Mr Betts: Can I follow up on one or two points that Alison Seabeck was raising. Even if the planning gain supplement comes in we know that the section 106 agreement will be there on housing sites for affordable housing and we also note from what you said, and I think all our constituents would agree with you, that local authorities are very different in how well or how badly they deal with the current situation. As well as looking at how the planning gain supplement might operate, are you going to give details of how it will improve the operation of section 106? Particularly, are you going to issue some guidance to local authorities? That does not mean to say, "There is section 106, use it if you want", but actually points them in the way they ought to be using it to improve and increase the number of affordable houses being built.

Yvette Cooper: We have revised practice guidance already that we have been drawing up to try to improve the existing system but that is the existing system separate from how it might operate with the PGS. What we would certainly need to do is to have some very clear approach to section 106 with a PGS alongside it and we might well do that as part of the legislation, for example, around the PGS. That could be one approach to it. You could also consider much clearer guidance, a much clearer framework, for example, about the way that affordable housing is done through section 106. All of these are the sorts of things that we are looking at where your recommendations would be very helpful to us but we have not taken decisions.

Q329 Mr Betts: In the interim we might get some interim guidance on section 106 use under the current arrangements?

Yvette Cooper: Yes.

Q330 Mr Betts: It would be really helpful if we could have that. In terms of the money coming into the local authorities and how it is going to work, currently if you get section 106 it tends to get spent on a specific infrastructure project of some kind, whether it be affordable housing or traffic arrangements, playgrounds, community facilities or whatever, but if planning gain supplement comes into the treasury of a local autohrity I think most of our concerns would be the rubbing of hands in the city treasury and the money disappearing to reduce the council tax or plug the gap in social services spending that year and much less getting spent on infrastructure and some of those projects. Is that a real possibility or will something be done to stop it?

Yvette Cooper: Again, that is one of the issues that you need to take into account when designing what the mechanism is for returning resources to the local authorities. You would want it to be infrastructure funding so you could think of that as being capital funding, as being resources. One option might be to ring-fence it for infrastructure. Another approach might be to say local authorities should have the flexibility, and ultimately that is what they are elected to do and they should be democratically accountable for those decisions. Again, we have not set out the way in which that should work and there are arguments from different points of view as to how you should do it.

Q331 Lyn Brown: One could argue that the failure to put in a basic infrastructure in order to enable a community to be sustainable causes calls on the public purse for other services, ambulance, the police, doctors, et cetera.

Yvette Cooper: Some of the stakeholders involved here have very strong views that it should be ring-fenced; others, you can imagine, are quite keen for it not to be.

Q332 Mr Betts: One point that has not been raised is the two different approaches people have taken. Quite a bit of the evidence has said if you have a system make it as simple as possible, we do not want any discounts, we do not want exemptions, and then lots of other evidence has said if you give exemptions this is where you draw the line. One point that has been raised, I think by English Partnerships as well as others, is if housing meets the five star rating in the draft Code for Sustainable Homes because those homes would pose less demands on the infrastructure they should be exempt from planning gain supplement, or at least the land they are built on or the value should be exempt in those cases. Have you got a view on that? Is that something you are considering?

Yvette Cooper: I think this is a really interesting idea. There may well end up being a series of practical difficulties with it, not least that it might be sensible, as you say, to have a very simple process with very limited exemptions. There are some difficulties about having something which has to be paid at the point before development begins but the standards that you want to put in place would be put in place as part of the development. If you want to build to a particular standard of building regulation or a particular standard in terms of the Code for Sustainable Homes, that building has not taken place at the point at which you would be paying your supposedly discounted rate of planning gain supplement. There would be a whole series of questions like that. Also, there are some interesting issues about whether you could use the Code for Sustainable Homes as the test or whether you would look at some of the other issues which are more easily built into the planning system. For example, a lot of local authorities are now looking at requiring a certain amount of micro-generation or onsite renewables to take place, so requirements of ten per cent of the energy to be provided on onsite renewables on new developments. It might be easier to look at the sorts of things that you build into the planning system than the kinds of things you traditionally tend to build into building regulations and the Code for Sustainable Homes. I think this is a really interesting area and it is far too early to be able to take decisions. This might be something that you might have to look at again over time and it might not be something you could build in initially but something that you could consider over time as it becomes clearer in terms of the way you might measure things or take them into account.

Q333 Mr Betts: Do you have a timetable yet for introduction or are you waiting for the cross-cutting review on the implications on housing growth and the infrastructure costs and then perhaps you could fix the rate of planning gain to fill the cost of the infrastructure?

Yvette Cooper: The timetable is we want to say a lot more about the planning gain supplement by the end of this year, so effectively our response to the consultation by the end of this year. The spending review timetable takes us through to next summer and that will be the timetable for the cross-cutting review. The earliest that we could introduce a PGS if we took it forward would be 2008. Beyond that, I do not think we have set any further timetables.

Q334 Alison Seabeck: The Law Society believes you are going to have to introduce primary legislation to make changes to the planning law. Is that your understanding and is that factored into your timetable?

Yvette Cooper: We have not taken final decisions about how we would do it. We might need to look at paving legislation in order to be able to do some of the preparations. John might be able to give you a better answer to this because a lot of these are Finance Bill considerations and there would be implications for section 106. We have not come to any firm decisions on this but we have anticipated the fact that legislation will be needed.

Chair: Thank you very much, Minister.