HL Deb 25 February 2004 vol 658 cc230-3

2.54 p.m.

Lord Berkeley asked Her Majesty's Government:

Whether, in the light of a report that land values around Jubilee Line stations have increased by £13 billion, an element of such gains should be made available to fund new rail lines.

Lord Davies of Oldham

My Lords, at present land value increases are partially captured via measures such as developer contributions and business rates. The Government have no plans to impose new taxes on businesses or households for value uplifts associated with the existing Jubilee Line extension. The Government continue to keep funding options under review and will take account of any recommendations arising from the Barker review of property.

Lord Berkeley

My Lords, I am very grateful for my noble friend's reply. Would he not agree that the enhancement of property value could be used to at least part-fund, if not wholly fund, Crossrail? Is it not right that the property industry should contribute something to the common good created by such new lines? Does he agree that it would be a good idea to set up a task force with the Treasury, the ODPM and the Department for Transport to see how that could be delivered and help with the funding of Crossrail?

Lord Davies of Oldham

My Lords, as my noble friend will know, a decision on Crossrail has not yet been made, but the Government have made it clear that a significant contribution would be expected from businesses that benefited from the development, in addition to any government contribution.

Baroness Scott of Needham Market

My Lords, does the Minister not agree that it is ironic that, at the moment, many transport infrastructure projects do not go ahead because there is not enough finance publicly available? By using the increases in land values that accrue after a project has been built, transport improvements for the public would be gained at no cost to the taxpayer, and would provide an opportunity for wealth creation on the part of the current landowners.

Lord Davies of Oldham

My Lords, there is something in what the noble Baroness says, but she will recognise that it is quite difficult to quantify the enhanced value of property from transport developments. We would certainly find that extremely difficult with regard to the original Question on the Jubilee Line extension. She will also know that attempts in the past to tax land enhancement values have proved very difficult.

Viscount Astor

My Lords, can the Minister confirm that the Government have no intention to introduce any stealth tax that might impose on homeowners who happen to live near a Tube station? Can he tell us why the decision on Crossrail has been so delayed, now by over a month?

Lord Davies of Oldham

My Lords, the Government have no intention of introducing any stealth tax—

Noble Lords

Oh!

Lord Davies of Oldham

My Lords, we certainly do not intend to introduce one on those fortunate enough to live close to Tube stations.

Lord Lea of Crondall

My Lords, would it not be fair to say that there is as much of a challenge here to financial arrangements in the City of London as there is to the public purse? Capturing the benefit of Crossrail to businesses from east to west through London requires the City of London to come up with imaginative ways to get those businesses to chip in to a big bond issue to help to finance the scheme. Although that is not an issue for the Government directly, it captures the same principle as that enunciated by my noble friend Lord Berkeley.

Lord Davies of Oldham

My Lords, constructive minds in the City are looking at the way in which funding could be provided for the development of Crossrail. All Londoners recognise—certainly the City recognises—the benefits that Crossrail would bring. Of course, no immediate proposals are on the table, and the Government are making it clear that until a proposal comes forward that is realistic in terms of the contribution from the City and from business, the question of a government contribution to the scheme remains on hold.

Lord Skelmersdale

My Lords, would the Minister be good enough to answer the second supplementary question of my noble friend Lord Astor, which was on why the announcement on Crossrail had been so long delayed?

Lord Davies of Oldham

My Lords. I apologise to the noble Viscount for inadvertently—it was inadvertent—failing to answer his second question. I am grateful to the noble Lord for giving me the chance to do so now. The reason why no decision has been taken with regard to Crossrail is implicit in my answers so far in relation to Crossrail. The Government are saying that the project cannot be fully funded out of taxpayer-government funds. There has to be a realistic proposal of the contribution from the business community. When that emerges, we can make progress on Crossrail, which the whole House will recognise is a desirable development.

Lord Tomlinson

My Lords, does my noble friend agree that the greatest possible threat to Crossrail, a project that will require some public funding in addition to the private funding, would be any change of government that led to the election to office of a party committed to a moratorium on public expenditure?

Lord Davies of Oldham

My Lords, I shall shock my noble friend by saying that I agree with him.

Lord Greaves

My Lords, perhaps I may return to the Question, which is about increased land values following particular developments. Is not the answer that the Government ought, as a matter of urgency, to be revisiting the introduction of land value taxation? It is almost 100 years since your Lordships' House had a huge battle over this, and with terrible consequences in many ways. Perhaps I would look forward to such battles again.

Is it not the case that land value taxation would be a much better and fairer way of financing local government than the council tax and it would also, in many ways, allow a reduction in other taxes, such as income tax?

Lord Davies of Oldham

My Lords, a review of local taxation is being carried out by my honourable friend Nick Raynsford and his department. The noble Lord will recognise that the phrase used by Lloyd George in 1909 about the desirability of taxing the unearned income of land values has proved to be an extremely difficult concept to realise in the succeeding century.