Local Government Bill

[back to previous text]

Mr. Leslie: Clause 47 states that the BID levy can be raised on ratepayers only while the BID arrangements are in force in that area. It also states that the duration of the BID, and therefore the period of time for which ratepayers will have to pay the additional levy, will be specified in the BID arrangements. However, to answer the point made by the hon. Member for New Forest, West, a related provision in clause 52 states that BID arrangements cannot remain in force for more than five years unless their renewal is approved in a fresh ballot of ratepayers. I hope that the debate on clause 52 will clarify those matters.

Subsection 47(3) provides that the BID levy will be calculated according to any method set out in individual BID arrangements. It is therefore not limited to being calculated on the basis of rateable value. It could be a flat rate levied on all properties, whatever their rateable values. However, from discussions with business organisations and rating professionals, we have concluded that the easiest and most popular way of calculating the levy is likely to be as a percentage of the rateable value of individual properties. Special provision may be needed to allow for the fact that charities or other non-profit-making bodies are less able to pay for the BID than profit-making bodies.

Column Number: 349

Advice on calculating the BID levy will be available in the guidance on BIDs that accompanies the Bill.

Mr. Clifton-Brown: The Minister skated over that arrangement quickly. This is new territory; it is a new announcement today. As I understood it, different arrangements can be made for charities and voluntary bodies, which may be exempt from non-domestic rates anyway. Will that apply in a particular BID, will the arrangements be set out in the initial BID document or will guidance be prescribed nationally?

Mr. Leslie: It will be a combination. The guidance note touches on some of that. In general, the BID proposers will have to anticipate much of that, including the way in which they expect to levy a fair contribution from ratepayers across the BID area. Many of the arrangements and proposals will include many of those provisions. However, we shall certainly elaborate on some of those points in the guidance.

Mr. Clifton-Brown: I am sorry to press the Minister. I am still not clear whether there will be different arrangements for different BIDs and how they will be arrived at. Will there be guidance for each BID or will it be up to the local authority that draws up the arrangements in the first place to decide what provisions it will make for charities and voluntary bodies? One person's perception of what a charity or voluntary body can pay may be different from reality.

Mr. Leslie: I understand the hon. Gentleman's point. We are trying to put in place a permissive framework, not only through the legislative provisions but through the guidance that will supplement them. There will not be individual guidance notes for each BID. We will set the framework out and make it possible for special provision to be made for charities or others in an area. Indeed, we may give guidance that that would be good practice, but many of the matters will have to be decided by those putting together the BID proposals.

The hon. Gentleman asked whether the scope of the BID was unlimited. It is not. It is largely constrained by the fact that the ratepayers must give their assent to the levy that they will have to pay. I do not believe that their rate burden can be doubled, unless for some reason they seek to make that level of contribution. We have the double lock in the voting provisions to ensure that both large and small businesses have a strong say in the outcome of that vote.

My understanding is that there will not be different provisions for empty properties, but that the normal arrangements for the collection of rates will apply. If a levy is a liability for a ratepayer and there is a vacancy in a particular property, that levy, like the rates, would fall on the person who would usually become liable for the empty property.

On powers to cease a BID midway, I doubt that that provision is necessary. However, as the hon. Gentleman knows, we may come to that later. The local authority has a veto on the proposals. There is also the power to appeal to the Secretary of State and so forth. The fact that the proposals have to specify very clearly at the outset the likely activities of the BID means that we anticipate that those matters can be dealt with then.

Column Number: 350

9.15 am

Mr. Clifton-Brown: I did not want to make a huge issue of the clause, because it is integral to the whole thing. However, the Under-Secretary said something that needs probing. He said that he doubts that there will be any need to suspend or cease a BID. Surely in the examples that I gave—severe flooding, riots, civil commotion and terrorist attacks—the whole purpose of the BID might be completely blown apart, to use an unfortunate pun. In circumstances involving such severe events, it might make sense to abandon the BID or, at least, suspend it. As I understand it, the Bill makes no provision for that.

Mr. Leslie: As I said, we do not anticipate that those circumstances will arise. However, clause 56(4) gives a reserve power to the Secretary of State to alter or terminate BID arrangements, if required. We do not see such circumstances arising.

The hon. Member for New Forest, West asked about the chargeable period and wanted to know for how long the charge would be levied and when renewal would take place. As I said, the answer is five years. I think that I have answered those points and I hope that the Committee will support the clause.

Question put and agreed to.

Clause 47 ordered to stand part of the Bill.

Clause 48 ordered to stand part of the Bill.

Clause 49

BID Revenue Account

Question proposed, That the clause stand part of the Bill.

Mr. Swayne: Subsection (4) states:

    ''The Secretary of State may by regulations make further provision in relation to the BID Revenue Account.''

Will the Under-Secretary tell us what sort of regulations will be made? I am still not clear in my own mind about the billing authority. Is it expected that each BID will set up its own such mechanism? Or will it typically be the case that the local authority will provide the billing authority function? In that case, the need for additional regulations would presumably be rather less than if the billing authority were to be created by the BID process itself.

Mr. Clifton-Brown: We need briefly to test the Government and to ascertain under what circumstances the local authority would have access to the BID account. What happens if the account goes unexpectedly into deficit? How is that deficit to be made up at the end of the BID process? Will it have to be repaid by the local authority or will it have to be repaid as a form of supplementary rate by those non-domestic ratepayers who are involved? That is an important question and we need answers from the Government.

Mr. Leslie: The clause imposes a duty on the billing authority responsible for collecting the BID levy to hold the revenue that it collects on behalf of the BID in an account called the BID revenue account, which is separate from the billing authority's other finances, not least to give protection to those other finances.

Column Number: 351

That will also ensure that there is clear accounting for the BID arrangements. The money raised through the BID levy will therefore be ring-fenced and may be used only for BID purposes.

The billing authority must run the BID revenue account in accordance with ''proper practices'', which are defined in clause 21 and are the accounting practices to be followed by local authorities, including any specifically provided for in legislation. Therefore, if hon. Members were wondering about the particular rules that govern the revenue account arrangements, clause 21 will apply in the usual way to their operation.

Clause 49 gives the Secretary of State power to make further regulations relating to the BID revenue account, should that prove necessary. The hon. Member for New Forest, West asked about that. Those arrangements are set out in the guidance. In setting up the BID system, we want to be as flexible as we can in the arrangements set out. Experience over time may well show that we need to take certain lessons into account. Flexibility to make further regulations is necessary so that we can make changes to respond to any issues that crop up. We envisage that such issues will be of a technical nature, relating to financial audit.

On the question of what would happen in the event of unforeseen circumstances giving rise to a deficit, I shall have to write to the hon. Member for Cotswold. I need to find out more on that and shall provide him with information later. I shall ensure that I circulate that information to the rest of the Committee.

Mr. Clifton-Brown: I hope that the Minister, having given that helpful and courteous reply, fully understands that he needs to write to the Committee. How those deficits will be dealt with is important. Will he say under whose auspices the BID account will be audited and scrutinised? Will it be under the usual local government regime, so under the auspices of the Audit Commission, or under departmental spending, so under the auspices of the National Audit Office? Can he clarify that?

Mr. Leslie: The BID revenue account will be held and run by the billing authority, so it will fall under the normal auditing and financial arrangements to which the billing authority is subject. In this case, the usual Audit Commission route will apply.

Question put and agreed to.

Clause 49 ordered to stand part of the Bill.

Clause 50

Administration of BID levy etc

Mr. Edward Davey (Kingston and Surbiton): I beg to move amendment No. 97, in

    clause 50, page 21, line 7, at end insert—

    '(1A) Regulations under (1) above may specify that all or a proportion of the start up costs of a BID can be met from the BID levy.'.

Column Number: 352

This is a probing amendment, because I want to be sure for what purposes the proceeds of the BID levy can be used.

Previous Contents Continue

House of Commons home page Parliament home page House of Lords home page search page enquiries ordering index

©Parliamentary copyright 2003
Prepared 6 February 2003