Interesting take on the Jenrick story, with The Sun saying he helped Desmond avoid £50m in "tax" over the Westferry Development - a couple of thoughts. thesun.co.uk/news/11871772/…
So far I have not seen other publications use the term "tax" - We dont have a development tax in the UK in the same way other countries do, but CIL, the levy that the Secretary of State's decision allowed Desmond to avoid is very much supposed to act like one.
CIL is not the only contribution developers make in order to get planning permission through. Affordable housing obligations, and S106 obligations often act as a form of taxation, and planning avoidance is as bad if not worse than tax avoidance in many ways.
In order to avoid planning obligations, a developer must show that he or she is only going to make a small, but not excessive profit on their building. Much as corporate tax avoidance involves the argument that companies not making a profit in any particular jurisdiction.
However, often developers are in fact making a profit, and know they will make a profit, so the only way they can avoid their obligations is to employ a surveyor to create a (fictitious) economic forecast which will demonstrate that they will either make a loss or make no profit.
This forecast will not be the document relied on to raise funds, after all, who wants to invest in an unprofitable or marginally profitable development with bags of risk. So another document is produced, often by the same firm of surveyors to show bags of profit!
In the world of tax, complex transactions are used to move profits around the world to low tax jurisdictions which makes multinational tax avoidance much more complicated. In the dirty world of property development though, its just plain fraudulent misrepresentation.
I have always struggled to see how the behavior of the surveying industry in creating false economic forecasts could ever be described as anything else.
Into this steps a politician, the Secretary of State, who is supposed to just take a view on these documents.
Could you imagine if tax disputes were decided by the Chancellor - that is what happens in the world of planning. Its a bit bonkers.
Could you imagine if tax disputes were decided by the Chancellor - that is what happens in the world of planning. Its a bit bonkers.
In the tax world, these difficult technical issues are decided by a department which is entirely independent of the Chancellor - they still get things wrong, but it is obviously a far more robust system.
Please note, I have no knowledge of the details of the Westferry scheme. Or the decision. I am just making the general point that the surveying industry is deeply corrupt, and fraudulent conduct is endemic in the industry. I have written more on this here: ourcity.london/issues/viabili…
And that the institutional structures to deal with this are inexcusably bad. The people standing between cut throat developers and the public interest, are you local planning committee and sometimes the Secretary of State.
The data on this is very clear and has been for a long time. But almost nothing has been done.
There have been huge increases in prices in the London housing market over the last ten years.
There have been huge increases in prices in the London housing market over the last ten years.
However, despite soaring profits, every single property development comes to planning committees with an economic study attached alleging that it will be unprofitable and requesting a deal to reduce planning obligations. This cannot be happening without widespread fraud.
It is simply not credible that the surveying profession is just getting their forecasts wrong on a systematic basis all the time.
If they are not engaging in fraud, they are so incompetent that they simply do not justify the fees they charge. The profession might as well go home
If they are not engaging in fraud, they are so incompetent that they simply do not justify the fees they charge. The profession might as well go home
The Jenrick story is important, and it is shocking that the DCLG have admitted to apparent bias - which is almost an impossible bar legally to meet.
Proof of this is found in my case on the Shell Centre where the planning inspector was accused of behaviour akin to "judicial misconduct" in "appearing to favour" one side, but that was not apparently not tantamount to apparent bias. bailii.org/ew/cases/EWHC/…
But the point I am making is that the Jenrick story sits within a wider context of a deeply corrupt industry and a deeply flawed planning system that comprehensively fails to protect the public interest and which needs to be confronted.
