Select Committee on Transport, Local Government and the Regions Fifteenth Report

Part 4: Business Improvement Districts

33. Part 4 of the Act puts in place provisions for the introduction of Business Improvement Districts (BIDs). Under a Business Improvement District local businesses would vote to pay a levy to fund additional services or improvements of benefit to the locality. Generally, our evidence is positive about the "enabling" way in which Part 4 of the Bill has been drafted and its reliance on local discretion and guidance prepared jointly by central and local government the business community.[43]

Funding new activities

34. The Explanatory Notes state that "Clause 56 provides that a billing authority which has made Business Improvement District arrangements must keep a separate account for the BID levy revenue, i.e. the revenue is ring-fenced and may only be used for BID purposes." The memorandum from the Confederation of British Industry (CBI) noted:

"BIDs must bring identifiably new money and improvement. The draft Bill recognises that BID revenue must be ring-fenced and demonstrably used to fund new activities as opposed to existing services to the business community."[44]

CV One (the city centre company in Coventry) which operates a close approximation to a Business Improvement District (based on voluntary contributions) stressed that business support depended heavily on the guarantee of tangible, additional benefits.

"You have to demonstrate genuine measurable additionality. It would not only give people a package of enhanced benefits and services, but also set ourselves performance targets every year, much like public service agreementsand we are part of Coventry's public service agreementwhereby people can see that there have been tangible and measurable improvements in trading performance and crime levels, et cetera.

We recommend close monitoring of the additionality of Business Improvement District-funded activities.


35. We were pleased that the Minister wanted to encourage property owners to contribute to BIDs.[45] This makes sense as landlords have much to gain in the long term from a successful BID. The British Property Federation said that its members wanted active involvement. The CBI and British Retail Consortium also argued that property owners should be involved. We heard different views on the best way of achieving this. We recommend that the Government works with the British Property Federation and other business organisations to find the best way of involving property owners as contributors to Business Improvement Districts, if necessary amending primary legislation and certainly covering this point in regulations and guidance.

Small businesses and other special interest groups

36. Under Clauses 58 and 59, for a Business Improvement District to be established, a "prescribed percentage" of those liable to pay the levy must first vote in favour—on the basis of both a percentage of businesses and a percentage of the rateable value. The Regulatory Impact Assessment indicates that this will prescribed as the majority of businesses and more than 50% of the rateable value.[46] The memorandum from the Association of Convenience Stores stated, "It is vital in setting rules for the arrangement of BIDs, appropriate and effective protection for small businesses is retained."[47] We recommend that a threshold of two thirds of the number of businesses should be adopted to safeguard the interests of small businesses in a Business Improvement District. The memorandum from the Association of Convenience Stores also raised wider concerns about the need to define the scope of a Business Improvement District well.[48] The geographical area where Business Improvement District levies are payable should accurately reflect the geographical area where benefits will be accrued.

37. The Regulatory Impact Assessment states, "The amount that small businesses chose to contribute to a BID scheme will be left to each BID area to decide and the voting system should ensure that their interests will be effectively represented. It will be possible for smaller businesses to contribute at a lower rate than larger businesses, if that is agreed locally."[49] Similarly, it may make sense for a few specific occupiers within a BID not to contribute, perhaps because they have limited budgets or because they would receive limited benefits from the scheme. For example, it might make sense for schools, hospitals or small providers of niche or community services not to contribute. They could be explicitly 'carved out' in the proposal on which the remaining businesses are asked to vote. We recommend that Business Improvement District partnerships give consideration to reductions and exemptions from the levy, at the start of the process, so that the composition of those voting accurately reflects those who will be liable for the levy.

38. We have also received evidence that proposes that the BID concept should be developed more widely and be used in other contexts. Professor Stoker said: "I would be quite interested in seeing whether you could extend the principle of BIDs, the Business Improvement District idea, to a kind of negotiated agreement with other sectors in the economy, not just business people."[50] We recommend that the Government ensures that the Bill is drafted so that local authorities can choose to adapt such districts, if appropriate to meet local circumstances.

43   See for example, Association of Town Centre Managers (LGB32), Coventry City Council and CV One Limited (LGB14) and Local Government Association (LGB05) Back

44   LGB39 Back

45   Q636 Back

46   Paragraph 5, Section 4, Regulatory Impact Assessments, Business Improvement Districts Back

47   LGB23 Back

48   LGB23 Back

49   Paragraph 7, Section 4, Regulatory Impact Assessments, Business Improvement Districts Back

50   Q285 Back

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