HC Deb 27 March 1996 vol 274 cc1110-4

`The following section shall be inserted after section 70 of the Capital Allowances Act 1990

"70A (1) If person carrying on a trade incurs expenditure on the construction of or alterations or refurbishment to a qualifying building occupied by him for the purposes of that trade then, if an allowance or deduction in respect of the expenditure could not, apart from this section, be made in taxing the trade or computing the profits or gains from it, this part shall apply as if the expenditure were capital expenditure incurred on the provision of machinery or plant for the purposes of the trade, and as if the machinery or plant had, in consequence of his incurring the expenditure, belonged to him, and as if the disposal value of the machinery or plant were nil.

(2) If a person has incurred expenditure on the construction of or alterations or refurbishment to a qualifying building let by him otherwise than in the course of a trade then, if an allowance or deduction in respect of the expenditure could not, apart from this section, be made in taxing the letting or computing the profits or gains from it, this part shall apply as if the expenditure were capital expenditure incurred in providing machinery or plant first let by that person, otherwise than in the course of a trade, at the time when the expenditure was incurred and as if the property comprised in the lease of the qualifying building had as from that time included the machinery or plant, and as if the disposal value of the machinery or plant were nil.

(3) In this section 'qualifying building' means any building or structure in a retail enterprise zone.

(4) In this section, 'retail enterprise zone' means an area designed as such by an order made by the Secretary of State under power in that behalf conferred by Schedule 32 to the Local Government, Planning and Land Act 1980 or, in Northern Ireland, by an order made by the Department of the Environment for Northern Ireland under Article 7 of Enterprise Zones (Northern Ireland) Order 1981.

(5) The writing down allowances within section 24 which are made to a person by reason of this section are not to exceed £50,000 in aggregate for a chargeable period.

(6) This section applies to expenditure incurred on or after 28th November 1995.".'.[Mr. Pearson.]

Brought up, and read the First time.

Mr. Ian Pearson (Dudley, West)

I beg to move, That the clause be read a Second time.

The aim of new clause 14 is to give help to high streets, which have suffered as a result of out-of-town retail development. In the past 15 years, there has been a major growth in out-of-town shopping centres. The Metro centre in Gateshead, Meadowhall near Sheffield and the Merry Hill centre in my constituency are just three well-known examples. Although those developments have undoubtedly proved popular, they have created major problems for town and local centres, in some cases threatening their future survival as shoppers go elsewhere, retailers move out, premises are boarded up and prone to violent vandalism and high streets go into a spiral of decline.

Belatedly, the Government have recognised the damage that their lax attitude to planning matters has done to our high streets. In July 1993, they produced planning policy guidance 6 and, in July 1995, even tougher guidance in draft form, which is yet to be implemented, but which clearly states that future proposals must take into consideration the vitality and viability of town and local centres. Turning off the tap now, however, will not stop the flow of the many developments in the pipeline or do anything to right the wrongs and to repair the damage that the Government's policies have heaped on many high streets already.

It is perhaps stating the obvious to say that building the second biggest retail complex in Europe less than three miles from Dudley and Stourbridge town centres and right next to Brierley Hill was bound to affect local trade. The Merry Hill impact study conducted for the Department of the Environment provides hard evidence of that. It shows graphically the 70 per cent. decline in comparison goods shopping in Dudley town centre and a 43 per cent. decline in Stourbridge.

We cannot turn back the clock. Nor would I want to with 1.8 million sq ft of retail space and two and a half miles of malls attracting 23 million visitors a year. Merry Hill is a major success story. It has created significant transport problems, clogging up roads for major parts of the day, creating pollution, annoying local residents and having dramatic consequences for long-established town centres.

I do not want to talk down Dudley or Stourbridge town centres. In the past five years, retailers and business people who are trying to make a living there have suffered enough, but I acknowledge that, recently, there have been some improvements as the market has adjusted to new patterns of shopping. Warm words from the Government and a stricter use of planning controls are simply not good enough.

The Daily Telegraph, commenting on the new draft guidance, said that it leaves the Environment Secretary in the uncomfortable and somewhat ridiculous position of ordering back the tide of Britain's modern car-borne shoppers. We should not be trying to do that. We have to live in the now. What we can do is support town centres and the people in them who are trying to develop new visions and strategies for their future. There have been some exciting recent developments in the science of town centre management and in action in partnership to revitalise and regenerate towns and local centres. The new clause would boost that process of developing new strategies and plans so that towns and local centres could offer a vibrant future.

The new clause would give writing-down allowances on costs of construction, alteration or refurbishment of premises in a retail enterprise zone. It is not designed to be massively expensive. It gives the Secretary of State the power to control the number and size of retail enterprise zones. There are limits of £50,000 in any one chargeable accounting period for which business men can claim writing-down allowances.

The new clause would go some way to repairing some of the damage that has been done to Dudley town centre and other similarly affected centres. It would not solve all the problems, but it would make significant improvements, and I would welcome the Government's favourable response to it.

The Chief Secretary to the Treasury (Mr. William Waldegrave)

The debate initiated by the hon. Member for Dudley, West (Mr. Pearson) has become something of an annual event, which always produces an interesting speech and a response from the Government which sympathises with a great deal of what he says. He will understand if I do not refer in detail to Merry Hill because I understand that a planning application has been submitted to extend that great site, and obviously I must not say anything that might be taken wrongly and prejudice the decision. The experience that the Member for Dudley, West has had in Dudley is obviously interesting and important.

I want to offer one or two new arguments to show why I do not think that the hon. Gentleman's approach, with which in principle the Government are sympathetic, is right. We are sympathetic because he is trying to use market forces, by offering incentives to get things moving, rather than the dirigisme of planning. In some senses, that fits in very well with Conservative philosophy. However, one or two points lead us—I am sure that it does not surprise the hon. Gentleman—to reject his new clause.

I also come from an inner-city constituency, where there have been some extremely controversial planning applications over the past two or three years. As a constituency Member of Parliament, I have campaigned against some applications for big retail centres within the city, but on green space within it, which had widespread opposition from my constituents and others on the grounds of loss of green space and also because they would divert shopping from existing shopping areas and streets in the city of Bristol. There has also been rapid development outside Bristol in the north fringe of some classical out-of-town centers—not as big as those in Dudley but of the kind with which the hon. Gentleman is probably familiar.

If we had designated areas of the city to try to counteract the pull of the north fringe, we might have found ourselves facing the paradoxical outcome of encouraging some of those very big inner-city developments, which—it would have been argued—would not have been very satisfactory. We might still have ended up with a new conflict and encouraged big inner-city shopping developments, which, arguably, would also have damaged the more traditional high streets in the city.

That seems to show that, although the hon. Gentleman's motivation is very sensible, such an approach is rather a blunt instrument, and that, with all its faults—such an argument is probably more often heard on his side of the House than mine—the finer grain and more exact targeting through the proper use of the planning system is a better way in which to deal with the problem.

8.45 pm
Mr. Andrew Smith

I am following the right hon. Gentleman's speech, as I am sure are all hon. Members, with some interest. The argument of my hon. Friend the Member for Dudley, West (Mr. Pearson) is that in some respects at least there is not a genuinely level playing field, in fiscal terms, between new out-of-town, or indeed new inner-town, developments, such as the Chief Secretary has described, and more conventional and traditional developments, especially in inner-city shopping areas. If the right hon. Gentleman does not accept my hon. Friend's argument as a means of addressing that situation, does he at least accept that there is a case for examining with great care the fiscal effects of the present legislation on new and green-field development in comparison to its effects on more conventional city centres to see whether there are not ways in which to give incentives to, particularly, the smaller shopkeepers in more traditional centres, as my hon. Friend is trying to do?

Mr. Waldegrave

The point made by the hon. Member for Dudley, West is valid. There is certainly a perception that a new green-field site has a range of advantages over the redevelopment of an existing site. In Bristol, if I may refer to it again—the hon. Member for Dudley, West spoke of Dudley—we have the great Broadmead centre, which was built after bombing in the war and which is not very satisfactory in many respects. It is a classic late 1950s or 1960s development. There has been much good investment in it over recent years by Ladbrokes and others and some major steps have been taken, but it was probably more expensive than, as the hon. Members for Oxford, East (Mr. Smith) and for Dudley, West are arguing, it would have been on a wholly green-field site. None the less, the advantages do not seem fiscal. They derive not from any oddity in the tax regime, but from an inherent greater ease of developing on green-field sites, except for possible strains on the road system.

Therefore, a better way to right the balance is through direct control of the planning system. Although I understand the argument of the hon. Members for Dudley, West and for Oxford, East, with which we experimented in the early 1980s through enterprise zones, and which is still one weapon in the armoury, such a weapon has turned out to be a fairly blunt instrument, which creates curious boundary problems and a deadweight problem. It finances developments that might have happened anyway. Although I am glad to hear that the centre of Dudley is coming back to life, to some extent under its own steam as the hon. Member for Dudley, West was arguing, one ends up helping to finance developments that would have happened anyway.

We have mechanisms to address the point made by the hon. Member for Dudley, West that have been established and used on a bipartisan basis or by other parties separately over many years through the Town and Country Planning Acts, and the hon. Gentleman was generous enough to say that in recent years we have been steering the system that way. The turnaround was begun by the present governor of Hong Kong, and was carried through by his two successors as Secretary of State for the Environment. I am told that the current draft is quite restrictive. The balance is difficult to maintain because cities are dynamic. I know that many of the shops that are threatened—allegedly—by new developments in Bristol are where they are today only because they had to be moved out of the centre of Bristol because of the bombing in the war. They were not there before the war.

Things cannot be set in aspic. The traditional British urban centre is usually around a railhead, which was a result of ruthless free-enterprise competition 150 years ago. The only question is whether touching the tiller, which is legitimate for Governments to do, is better done through the fiscal system or the planning system. We argue for the planning system. As usual, the hon. Member for Dudley, West has stimulated an interesting debate and chivvied us along a little in remembering that the balance must be got right.

Mr. Pearson

I thank the Minister for his careful and considered reply, and for his acknowledgement that I am making a real point. His preference for the direct control mechanism of the planning system is all very fine for future developments, but it does nothing to redress the problems caused to my constituents and their businesses in the Dudley borough.

I must also point out that Merry Hill—uniquely, I think—is not a green-field out-of-town development but a brown-field development in an enterprise zone, which was not subject to any planning approvals whatever. Under that regime, there were 100 per cent. industrial building allowances and a 10-year rate-free period, so it is clear that the tax system offered significant incentives.

Mr. Waldegrave

I must not prolong the debate simply because it is interesting; that would get us into trouble with the usual channels. The hon. Gentleman is pointing to one of the inherent problems of the enterprise zone—the boundary problem. We may find that we have simply moved things from one place to another, and the argument revolves around righting the fiscal balance again. We could extend the zone, but then the inherent problems that we have been trying to solve might spread somewhere else. That was probably the right move to deal with the acute problem of Merry Hill, but every time we spread the boundary, perhaps we undermine the principle of the enterprise zone.

Mr. Pearson

I understand. We could have an interesting debate about boundary problems and creating special local economic initiatives by using the tax system. Arguably, those problems could equally apply to a whole range of other economic development initiatives such as single regeneration budgets, city challenge, and the old task force areas. I do not want to pursue that line, other than to repeat that I think that there is a special case for justice for Dudley, because it is the only area in which something of that size—Merry Hill is the second biggest retail complex in Europe—was built in an enterprise zone. As a result, it had massive tax advantages, and that persuaded virtually all the major retailers to move into it, not only for the capital benefits but for the revenue benefits of the rate-free period.

The example of the borough of Dudley makes a clear case for justice for our town centres. In view of the Government's reluctance to support my new clause, I shall seek other avenues by which to pursue that case, and I beg to ask leave to withdraw the motion.

Motion and clause, by leave, withdrawn.

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