§ 6.6 p.m.
§ The PARLIAMENTARY UNDERSECRETARY of STATE, DEPARTMENT of the ENVIRONMENT (Baroness Birk)
My Lords, I beg to move that this Bill be now read a second time. This short Bill provides for the continuation of the existing office development control powers, and for some minor, technical amendments to existing legislation.
The main purpose of the Bill is contained in Clause 1. This provides for the office development control powers—which my right honourable friend the Secretary of State for the Environment at present exercises under Sections 73 to 86 of the Town and Country Planning Act 1971—to continue for a further period of five years from 5th August, 1977. The effect of these powers is that within a designated area—and it is now only the South-East Region—all applications for planning permission for office development above a prescribed exemption limit need to be accompanied by an office development permit (or ODP as it is commonly called) which is obtained from the Secretary of State. I should mention straightaway that the scope of this control has recently been considerably relaxed because the exemption limit below which ODPs are not required has just been raised from 15,000 sq. ft. to 30,000 sq. ft. In the past 55 per cent. of the applications 960 received have been for ODPs of under 30,000 sq. ft.; so, on that basis, it is safe to say that this particular control has been removed from over half of all new office development. I will explain later why it is necessary to keep control over the rest.
First, my Lords, I will recall the history of office development control which goes back to 1965, when its introduction was among the first actions of the Labour Government which came into Office the previous year. It was maintained throughout the period of that Government and when its powers expired in 1972, they were renewed by the then-Conservative Government. Office development control has, therefore, had the support of Governments of both major Parties. Nevertheless, the emphasis of the objectives has changed considerably over the period, reflecting not only the different priorities of the major Parties but changing circumstances as well. in 1965, the general aim was to promote the better distribution of employment in Great Britain and, in particular, to ease the severe congestion which then existed in Central London.
In 1972, the Conservative Government decided to renew the controls for a further five years, the objective of steering office development to the less favoured regions was discarded and it was argued that control should be used for a limited period to further the Strategic Plan for the South-East. The emphasis then was on concentrating growth within the South-East Region in a number of defined areas; but the effect was to reduce pressure in London and to divert employment to already prospering and growing centres round the periphery. However, with the return to power of the Labour Government in 1974, the emphasis on steering firms to the assisted areas was again rightly re-asserted. Throughout the whole period there has been a gradual raising of the 3,000 sq. ft. exemption limit to the present limit of 30,000 sq. ft. This means that the control now applies only to offices where more than 200 or more people are to be employed. The area subject to control has also varied from time to time; but since 1970 the control has applied, as now, to the whole of the South-East Region.
The time has now come again to consider whether powers for office development control should be once more 961 renewed. The Government are firmly of the opinion that they should continue. Congestion in Central London is no longer the problem that it was in the 'sixties; the number of people commuting into Central London and working there is now considerably reduced. But there are still not enough office employment opportunities outside the South-East—especially in the assisted areas—and the Government are as anxious as ever to correct this imbalance. We believe that office development control is an essential part of our efforts to achieve this.
First, in looking at applications for ODPs the Department is able to identify firms which, because they have no particular tie with the South-East, might be persuaded to move to an assisted area, and officials are able to have discussions with those firms about this. Parallel with this direct approach the office development permit system is one of three instruments which together have been helping to spread non-Governmental office employment more evenly over the country. The other two instruments are the advice which the Location of Offices Bureau gives to firms wishing to move, and the grants which my right honourable friend the Secretary of State for Industry pays firms who move their offices to locations in the assisted areas. There can be no doubt that this combination of control, advice and assistance has created the climate which has contributed greatly to the number of firms who have moved since 1965. We therefore believe it would be quite wrong to weaken that system by allowing the ODP control to lapse at a time when the employment needs of the assisted areas are greater than ever.
There is a further strong reason for keeping ODPs: to help inner city areas. Apart from London it will be the job of local authorities to ensure that firms which set up offices in their areas are located where they can provide the best employment opportunities. But in London, ODPs provide a direct form of control and, as the recent White Paper Policy for the Inner Cities makes clear, my right honourable friend intends to give permits for a limited number of speculative office buildings in London's inner urban areas, choosing schemes which will make a strong contribution to the regeneration of those areas which require improved job opportunities and physical renewal. I 962 must make it clear that in talking about the inner city in London I mean those inner areas outside Central London itself—largely the West End and the City—where conditions are very different and where there is no immediate need to encourage office growth.
For these reasons, the Government believe the ODP system should continue. However, my right honourable friend has decided to confine the operations of this control to where it matters—to the larger office developments of over 30,000 sq. ft. of floor space—and, as I have already stressed, the ODP exemption limit has recently been raised to this level. The larger developments are those most likely to be mobile, and so able to move to locations in the assisted areas, while the smaller developments tend to be more firmly rooted in their local economy. By allowing a greater number of small to medium projects to go ahead, the Government will give a much needed boost to the construction industry. of whose problems we are acutely aware.
This relaxation will also help the property market. When the economy picks up again it will be reasonable to expect an upturn in demand for new and better offices. But in view of the time involved between seeking an office development permit and completion of the building, we must act early if we are to avoid the danger of the supply of new offices lagging behind demand, with a consequent inflationary effect upon rents. The situation will require continuous monitoring which will be done.
I should like to take this opportunity to clear up a misunderstanding which has arisen in some quarters. The recent relaxations in office development control system, which I have just outlined, in no way detract from the existing powers of local authorities to control developments in their areas through the Planning Acts. The granting of an ODP—or exemption from the ODP requirement—most certainly does not mean that a developer has been given carte blanche to build an office block on a particular site. If the local planning authority are opposed to it, then they can refuse planning permission in the normal way. There is no presumption that because an ODP has been granted, planning permission will automatically follow.
963 Apart from these carefully measured relaxations, the control will continue as at present: namely, ODPs are available only to provide offices for firms which can demonstrate that they have a tie with the area. In applying the control in the South-East Region outside London, the Government must make sure that the needs of other areas—the assisted areas and the inner cities—are taken properly into account; and also that the development of employment opportunities does not outrun the general development of the economy.
So much for Clause 1 and the new policies we are pursuing. The remaining clauses of the Bill will not detain us long. They provide for some minor, technical amendments to the existing legislation. Clause 2 simply makes it possible to provide that the floorspace exemption limit for office development permits is expressed in terms of square metres or in terms of square feet.
Clause 3 remedies a defect in the existing statutory provisions. It provides that an order made by the Secretary of State to exclude any area from control shall be subject to the proper Parliamentary procedure. Noble Lords will, I am sure, welcome this proposal for greater Parliamentary control over the Executive. Clause 4 also remedies a defect in the existing statutory provisions. It relates only to local authority development. At present, there are exceptional circumstances in which local authorities in the controlled area can develop offices without getting a permit. The purpose of this clause is to close that loophole, and put them on the same footing as other developers.
My Lords, having now explained the purpose of this Bill, its fairly short contents and the new relaxed context in which it is set, I commend it to the House.
§ Moved, That the Bill now be read 2a.—(Baroness Birk.)
§ 6.17 p.m.
§ Lord SANDYS
My Lords, the House will be grateful to the noble Baroness for explaining the Bill and also explaining the Government's aims in introducing it. The way in which the noble Baroness explained the history of office development 964 control, and the largely bipartisan approach which greeted its reception in 1965, is one which is a background upon which we can build. But I would, even at this early stage in the development of my argument, say that from this side of the House we believe the whole of this Bill to be unnecessary. I will develop my theme upon that.
This Bill's main aim, as your Lordships have heard, is to extend those powers which were accorded to it in the Town and Country Planning Act 1971, Sections 73 to 86, for a further five years starting from 5th August 1977. Little is given away in the Explanatory and Financial Memorandum of the Bill, but I think that the Government might have informed their avid readers of a number of facts about the cost of staff and what is taking place. At the foot of the first page, we are assured:The effect of the Bill will be to continue the cost of staff for administering the provisions. estimated at £128,000 a year".We understand that there are 12 on the staff at the present moment; and we further understand that the current number of applications are such that the cost per application is approximately £300.
The Government's intention is to increase the threshold from 15,000 square feet to 30,000 sq. ft. Therefore there is a basic assumption that the number of applications will be substantially reduced. But, my Lords, let us get down to the heart of it. What is an ODP? It is a licence, a permit, that grants a developer permission to go to a local authority and go through the usual processes of a planning application for an office building. But there is much more to it than that because the applicant has to satisfy the Department of the Environment that nowhere else outside the controlled area will do. That is really the machinery set up in Sections 74 to 86 of the Town and Country Planning Act 1971. In practical terms, this means an elaborate and vastly expensive operation.
In another place, the situation concerning the Midland Bank was referred to and I believe that, for the purposes of the Record it would interest your Lordships to know what took place. The Midland Bank made a proposal for 1,500 of its staff. They made the application and went through the procedures. They were 965 granted permission on the basis that a move would take place to a situation outside London. They considered no less than 750 other locations and eventually settled upon Sheffield. There, I understand, the Midland Bank are currently locating that particular group of office staff.
I do not believe that the Government are fully apprised of the very great difficulty experienced by firms if they are obliged to follow this procedure, even though the threshold has been raised from 15,000 sq. ft. to 30,000 sq. ft. Further, it is not possible for a developer to apply for an office space in blank: in other words, the named user in the particular case I quoted—the Midland Bank—had to apply for a quite specific location in a custom-built office block.
There are four categories of areas of control and the noble Baroness has referred to them. Broadly they lie in London and the South-East, but if we relate them to London itself they are the City of London, the rest of Central London, the inner suburbs and the outer suburbs. So the Government have rested their plans very firmly on three pillars. The noble Baroness explained that they were the office development permit, the Location of Offices Bureau—and, in parenthesis, I should like to say from this side of the House that we welcome most warmly the latter's continuance as a free advice service and consider that they have given that free advice service in a most valuable way for several years—and the incentive scheme to which the noble Baroness referred, under which a grant of £800 per employee moved out of London is permitted by the Industry Act 1972.
But we believe that the policy of the Government has changed and with it should change the office development permit. I must now refer to the recently-published Command Paper, Policy. for the Inner Cities, because that brings into line the whole of the Government's present policy. I should like, if I may, to indulge in a quotation. It is only brief but I think it is relevant. I quote from paragraph 56, page 13, of the White Paper:The functions of the Location of Offices Bureau have been reviewed and part of its new role will be to give particular attention to the promotion of office employment in inner urban areas, including London. Where firms are con 966 sidering moving, the local planning authority will be able to steer them towards inner city locations".I believe the noble Baroness referred to them, and of course it is a complete change of policy. If we look at this a little further, we see what a fundamental change is involved because, to my mind, one of the most interesting Statements made by the Government on planning this year was by an experienced Minister, Mr. Robert Mellish. He related a very interesting fact to the other place on 14th January at column 1828 in volume No. 923/924. He said this, and I will quote his exact words:When I was appointed a junior Minister with responsibility for London housing by my right hon. Friend the Member for Huyton (Sir H. Wilson) in 1964, we received the advice, which had also been given to the previous Conservative Government, that at all costs London had to be denuded of population and industry. We were told that it was growing fat and bloated and that the other regions were suffering as a consequence".To continue the quotation:Foolishly enough, I believed it. I took the advice of those great planners. For many months I spent much time urging industry and people to leave London.Looking back now, I realise that it was about the worst advice that any Government were ever given".My Lords, that was the Department in its wisdom advising the Government of the day. I think it is very easy, with hindsight, to see what would happen. Nevertheless, surely the best possible thing today would be for the Government to consider the errors of the past and take them into account in their new policy—which so far as the inner city areas are concerned, we welcome—and therefore, as a consequence, to abolish the ODP.
The story did not end in January with that statement being made in another place by the right honourable friend of the noble Baroness. We had also a very interesting debate here in your Lordships' House on 31st March of this year on a Motion of my noble friend Lord Sandford on four studies of inner city areas. We were much gratified that a few days later, on 6th April, the Secretary of State for the Environment made a Statement. That Statement is of very great interest because it relates to this specific problem, and I should like to quote just two sentences from it, which appear on 6th April in column 1227 of the Official Report of another place. The right honourable gentleman said this: 967A new direction is now needed for our urban policies. We must check and, where possible, halt the decline of the inner areas. … Above all, we have to shift the emphasis of Government policy and bring about changes in the attitudes of local authorities, of industry and of institutions".We certainly would not quarrel with many of those words, because the Secretary of State is looking in those sentences for a new direction. Unfortunately, the direction chosen is the old direction. He has returned to the policy of the ODP and the IDC, which we are not specifically discussing this afternoon. But he has foreshadowed in that Statement the need for a new look and has followed it up with a return to the original policies.
I think the most important remark we can make from this side of the House is that there is a conflict of logic between the need at the present time for all the things mentioned by the noble Baroness in her closing remarks—that is, to ensure that when the economy starts to reflate there should be enough office space and office accommodation. We are very much aware that there are empty office buildings and indeed there will always be empty office buildings in certain places. The original legislation arose out of one very famous, not to say notorious, office building; namely, Centre Point. All parties were agreed that this was something which at all costs should not be repeated.
Nevertheless, there is a very significant fact here which was pointed out most particularly by the Greater London Council in a statement of the 12th October last. The Greater London Council at that time was controlled by the Party opposite, and I quote from their resolution:That representation be made to the Secretary of State for the Environment, as follows:In parenthesis, I should say that the Government have acknowledged the need only for varying the threshold up to 30,000 sq. ft. and they have not nearly matched the proposals of the GLC:
- "1. That the Office Development Permit system now be dropped and in any event should not be renewed when the present powers expire in August 1977.
- "2. That if, not withstanding the Council's representations to the contrary, the control is to be continued, then it should be limited to developments over 100,000 sq. ft."3.… given the changed circumstances since the setting up of the Location of Offices Bureau, the fact that the Greater London 968 Council is responsible in its strategic planning role for the guidance of office development in London, and that it had also stated in its land policy statement … its intention to use the Act to further its objectives under those policies serious consideration should be given to the need for a body such as the Location of Offices Bureau so far as London is concerned, at least with its present functions".I do not think there is very much doubt that the continuance of the Location of Offices Bureau is welcomed, but the permits most emphatically are not.
Let us look a little more closely at the present comparison with our European partners, because this is surely of great significance, and let us examine the cost of average London office lettings in 1977. Figures have been quoted with some assurance in another place, and I have not been able to find better ones. The figures show rents of between £50 and £160 per square metre in London, compared with £36 to £47 per square metre in Brussels, £37 to £56 per square metre in Germany, approximately £46 in Amsterdam and between £16 and £44 in Milan. It is not surprising that these figures very much enter into companies' thinking when they are considering the location of branch and other offices in Europe. After all, when we are thinking of trading and merchandising, insurance, advertising, banking and all those other services which we associate with our invisible exports, it is surely very important to consider Continental rent levels. When one is considering where companies' subsidiaries, or indeed head offices, are to be located in the future, those figures should be taken into account.
Far from creating further employment in this country, it is quite possible that when a company is considering the situation it will say, "The Government have continued the office development permit system. Should we not look elsewhere? Where are our best interests likely to lie so far as transport and so on are concerned? "Clearly, Amsterdam is one of the nearer locations; but undoubtedly Milan, and even Turin, will hold considerable attractions to companies wishing to set up office on the Continent. I believe that the Government have mistakenly chosen to perpetuate a system which relates to the middle 1960s. We acknowledge that it was a bipartisan approach at that time. We further acknowledge that it was necessary to 969 continue it for a number of years. But written into the Town and Country Planning Act 1971 was a time scale, and the cut-out is only a matter of four weeks away. This is the time to allow the Act to operate, and for the cut-out to serve its purpose.
§ 6.35 p.m.
§ The Earl of KINNOULL
My Lords, I wonder whether I may intervene very briefly and, first, apologise for not putting my name down to speak. I should like to support my noble friend in what he has said, and to make three brief points to the noble Baroness, Lady Birk. First, it seems to those who have read the Bill that it is drafted with considerable laxity. If one examines it, one finds that it does not refer to what the noble Baroness said, which was the whole point of her argument, that the threshold for the South-East of England has now risen from 3,000 sq. ft., as it was in 1965, to 30,000 sq. ft. today. All the Bill does is to repeat in Clause 2 the words of the 1971 Act, and to mention the term "3,000 square feet". It then goes on to say, even more confusingly, that for "square feet" one should read "square metres". Square metres are a long way away from square feet and I should like to ask the noble Baroness what is the calculation in metres that we should all now know about. How many square metres do 30,000 sq. ft. represent? I should also like to ask why a Bill such as this, which is very important for those who have to operate it, should be drafted in this extraordinary manner, which is so unclear.
Secondly, I should like to ask how the criteria for office development permits now operate. Have they changed from the early days in 1965? The noble Baroness rightly said that, having obtained an ODP, it was by no means certain that there would be planning consent. I should like to ask why the South-East area cannot have the same control by the planners, particularly local planners, as the majority of the country, and why there should be interference from this body. I think that the noble Baroness's case for introducing this legislation is very weak, as my noble friend indicated. I should also like to ask her whether she can confirm my noble friend's figure of £300 for an application. It seems extremely high, and if my noble friend is 970 accurate, as he so often is, it will be very worrying.
Finally, I should like to ask what is happening to new office development in the South-East at the present time. believe—and I am likely to be very wrong —that there is very little new office development going on, because we are only just recovering from all the uncertainty of hank rate and the new development land tax, with its consequences. I should like to ask how many new office developments over 30,000 sq. ft. the Government anticipate during the next year. I suggest that even in the South-East of England the number will be very small. If it really is small, then I would ask the noble Baroness to think again about whether this legislation is necessary.
§ 6.38 p.m.
§ Baroness BIRK
My Lords, the noble Lord, Lord Sandys, began with his point about the Midland Bank. I was a little surprised about that, because although the Midland Bank may have considered 750 other locations what they did not do was apply for an office development permit. What the noble Lord has done is to take the number that they considered for their own purposes, and to think that it was in aid of an ODP. If I may say so, it was an understandable mistake. The noble Lord referred to what his honourable friend said in the other place. What he said was:Before it moved its 1,500 employees to Sheffield, the Midland Bank considered as possibilities 750 cities and towns. That is what has to be done by those who apply for an ODP." [Official Report, Commons, 17/5/77; col. 359.]What he was doing was taking that as an analogy, but, as I understand it, the Midland Bank did not apply for an ODP. He was taking that as a case which they handled themselves, and was saying that that is the kind of practice which will have to be followed by people applying for an ODP. Perhaps we could get that point out of the way. The noble Lord is quite right about the cost. It is true that it involves a staff of 12 or 13 people. In view of the fact that over 55 per cent. of the applications were in the range of the new extended office floor allowance, we have already said that if the applications go down we shall reduce that number by half; so it would he either six or six 971 and a half people, according to whether it is 12 or 13 now.
The noble Lord made a rather large point regarding the GLC. Whichever Party is controlling the GLC, it is not surprising that it should want control for London to be stopped. This is understandable and quite the proper way for the GLC to act on behalf of London. Probably it would be asking too much of them to show altruism in assisting the Government with their assisted area policy when they have their own problems. May I remind the noble Lord, Lord Sandys, that I said that in London the ODPs provide a direct form of control. Also, I referred to the White Paper on Policy for the Inner Cities, and pointed out that it makes it clear that my right honourable friend intends to give permits for a limited number of speculative office buildings in London's inner urban areas, choosing schemes which will make a strong contribution to the regeneration of those areas which require improved job opportunities and physical renewal. Then I made it clear that there is a difference between the West End and the City and the other inner areas which, although not assisted areas, have their problems. Those problems are being taken care of, so far as it is possible for us to do so.
It is perfectly true that the level of office rents is somewhat above Continental limits, but there are all kinds of reasons for this. It is also true that London is still the world's capital in terms of many commercial and banking enterprises. Having said that, the level of office rents cannot be laid at the door of office controls alone. We all know that there are many empty offices in London. One of the objects of continuing this control is to cut down on the building of offices which are then not used, something which I am sure we must all abhor. This is no good to anybody. We do not want to be dominated by a whole series of Centre Points.
By extending the exemption limits and relaxing them considerably in this Bill, the Government are keeping control, which is important at present, but making it a very much looser form of control. They are making it far easier for the smaller office developments either 972 to stay here or to go elsewhere. However, as I have said, the Government are also making it possible in this way for the larger operations to be encouraged and persuaded to move to the assisted areas. That is the policy and why we want to do it, and that is the effect of it.
The noble Earl, Lord Kinnoull, said that he thought the Bill was drafted with some laxity. I do not think that is so. I believe that the noble Earl is being unnecessarily unfair to Parliamentary counsel. As I understand it, Clause 1 makes it quite clear that the control of office development, in the same way as it was introduced on 5th August 1965, will continue. The fact that it is couched in Parliamentary and legalistic language does not alter its substance, which is the continuance in force of provisions relating to the control of office development. Clause 2 explains the increase in the exemption limit, and 30,000 feet is roughly the equivalent of 3,000 square feet, which is also contained in the Bill. That is how one translates the amounts. Very often I am the first person to knock any lack of clarity in a Bill, but this Bill makes the point absolutely clear. It refers to other relevant Acts, which is the normal practice, and it is quite right that it should do so. My noble friend tells me that I referred to square feet. If I mentioned square feet it was a mistake; I meant square metres.
The noble Earl also asked about what is happening regarding office development in the South-East. One of the purposes of the Bill is to try to discourage office development in areas where it is not needed. If the noble Earl is asking me whether I can give him the figures for the South-East, I am afraid that I cannot; I shall have to write to him.
One can go on arguing about this, I agree, for a long time. However, the point is that it is necessary that this control should be continued. My right honourable and honourable friends in another place consider this to be so as well. Office development permits are a quite different matter from planning permission. Office development permits are part of regional policy, whereas planning permission depends on a number of other factors as well. In the case of office development permits, the question is 973 whether a particular firm should be granted a permit to build an office. This is done entirely on the basis of the need in the area. There is also the question of employment, with which we are very concerned. These factors are quite different from the considerations which are taken into account when one asks for planning permission. I stress this only to underline, so that there will be no confusion, that the two things go together—that if you obtain an ODP you do not automatically obtain planning permission. I want this to be quite clear so that there can be no mistake about it.
I do not believe that, single-handed, office development control will bring about the balance we need in the assisted areas. As the noble Lord, Lord Sandys, very clearly put it and appreciates, this measure is one of three instruments of policy. I was delighted to hear his tribute to the Location of Offices Bureau. With a staff of about 15 people, this bureau gives an enormously wide spread of advice, help and information. That bureau also wants the control to be renewed so that it can play a part in helping to bring about the revitalisation of the inner urban areas of London. I believe I have already explained that point.
I do not like controls if they are unnecessary. However, I have spoken to a number of people who I am sure—although they do not sit in this House or in the other place—vote for the noble Lord's Party and who believe that in the present circumstances it is quite right to have controls, although they are delighted that they have been relaxed to the extent that they have. They feel that this relaxation meets the point.
I believe that I have answered the main points which have been raised by those sitting on the Benches opposite. I have no hesitation in commending this Bill to your Lordships and asking that it he given a Second Reacting.
§ On Question, Bill read 2a, and committed to a Committee of the Whole House.