Clause 26
Finance Bill
6:00 pm
Mark Hoban (Shadow Minister, Treasury; Fareham, Conservative)
I wish to explore some of the background to land remediation relief in the Bill. The Government have tabled a number of amendments to schedule 7. As I understand it, land remediation relief is given at 150 per cent. of the actual cost of remediation. Remediation costs include labour and materials incurred directly or through a contractor. When a business is profitable, the relief can be used to reduce the corporation tax payable. When a business is not profitable, it can claim a repayment capped at 16 per cent. of the lower cost of the qualifying expenditure or unrelieved losses.
I understand that the objective of the relief is to bring forward brownfield sites for development, particularly ones that have been contaminated. The draft statutory instruments that have been published alongside the clause discuss three aspects of contamination: radon, arsenic and Japanese knotweed. I will return to Japanese knotweed in a moment.
The Government have put great pressure on brownfield developments. A long time ago, the Office of the Deputy Prime Minister set a target that 60 per cent. of new developments should be built on brownfield sites. However, the definition of a brownfield site is quite elastic. Many houses have been built in my constituency on brownfield sites that other people might know as back gardens and former nursing homes. On brownfield sites previously used as industrial sites, chemicals may be left behind that have to be eradicated before the site is developed.
The pressure to build on brownfield sites meant that their value was pushed up until the recent property crash, particularly when there was a relatively low cost of remediation. The cost of remediation is a barrier to sites being used for development. It is therefore understandable that relief is made available to help mitigate the cost of remediation of the land. That is such an obvious point that it is difficult to understand why it has taken so long to get to the point in legislation where we try to improve the availability of the relief.
Lord Rogers’s urban task force, which reported in 1999, suggested that additional relief should be given to developers to decontaminate land. That did not include long-term derelict land. The Barker review of 2004 cited decontamination of brownfield sites as one of the principal barriers to redevelopment of such areas. Two years later, Professor Barker carried out another review. The Chancellor in those days was keen to commission a review in every Budget on all sorts of subjects. Professor Barker got good work out of that. Her review of land use and planning in 2006 said that the Government should consult on the reform of remediation relief to encourage new developments.
In 2007, there was a consultation on tax incentives for the development of brownfield land that looked at better targeting of land remediation relief and increasing certainty and publicity for the relief. The Government concluded:
“In light of the responses to the consultation the Government is minded to take a number of steps to improve the certainty of this relief. In particular, HMRC will be considering how to improve guidance and what mechanisms could be used to ensure that the relief is better publicised. This should help to ensure that financial planning takes full account of the relief from the start.”
We seem to have spent an awfully long time talking about and consulting on this, to get to the process before us today. Even after that long gestation period, the Government are still minded to table two amendments. I should have thought this would be a textbook bit of legislation after so much consultation, and that it would pop, fully formed, into the Bill, without needing to be amended at this stage.
An important issue that I have noted from my constituency is that the relief should be extended to Japanese knotweed. The draft statutory instrument refers specifically to the three botanical types of Japanese knotweed, which apparently holds the title as Britain’s most invasive plant. According to the BBC, its removal from the Olympic site in east London could cost hundreds of thousands of pounds. Apparently, it has bamboo-like stems and clusters of creamy flowers. It sounds exotic, but it is very expensive to remove. It can flourish in any soil, so hon. Members with poor soil in their garden might consider that it would provide an attractive plant, but it overwhelms other plants and damages ecosystems. It has the ability to grow through walls, tarmac and concrete.