Examination of Witnesses (Questions 20-30)
MR JEREMY
SKINNER, COUNCILLOR
MERRICK COCKELL
AND MR
STEPHEN LORD
19 JUNE 2007
Q20 Mr Hands: Are there no specific
plans to allow any of these people having the levy put on them
to have any say in where the money is spent other than a very
loose consultation about the general principles?
Mr Skinner: And we are quite clear
that in practice we would be consulting on a proposal to construct
Crossrail where there is widespread business support. The CBI,
London First, 20 per cent of the FTSE 100, the Institute of Directors
and many other business representing organisations are fully in
favour of Crossrail. The key question will be the extent to which
they are willing to contribute to what would be the largest civil
engineering project ever undertaken in the UK.
Q21 John Cummings: Perhaps you might
be able to tell the Committee how achievable Sir Michael's aspiration
is that the 33 London local authorities and the GLA might agree
on a single supplementary rate. How do you think that agreement
could be reached on spending priorities? I note you are all grinning
like Cheshire cats!
Cllr Cockell: It is just practical
experience coming to the fore. I think it is entirely conceivable
that we could reach an agreement.
Q22 John Cummings: I understand it
is conceivable. I am asking whether it is achievable.
Cllr Cockell: The legislation
must be clear. In London we would all want to get value. No doubt
the Mayor will want to reach an agreement to get value out of
it to go to Crossrail and the boroughs will want to get value
out of it to go to local schemes that need to get support from
the local businesses. Surprisingly, we are working ever better
with Mayor Livingstone. It will be a different Mayor after next
May so one has to talk about the office. Certainly with the legislation
going through Parliament at the moment we have been able to discuss
and reach some settlements with the Mayor. So it is not inconceivable.
Q23 John Cummings: I understand it
is conceivable. Do you think it is achievable and feasible that
the lion will lie down with the lamb in relation to reaching an
agreement on spending priorities or are we all just wasting our
time?
Mr Skinner: There is already virtually
unanimous agreement between the boroughs and the Mayor and the
London Assembly. London MPs also signed up to the Mayor's campaign
for Crossrail. That is the only proposal that the GLA has put
forward so far for a supplementary business rate. So in that sense
the agreement has already been reached.
Q24 John Cummings: It might help
the Committee if you could perhaps explain to us what mechanisms
for cross-London collaboration exist at present which might be
used as a model for securing agreement on a supplementary rate
and joint spending plans in the future.
Cllr Cockell: The current system
is that I meet with the Mayor, on behalf of the 33 authorities,
formally and informally on a regular basis. I think, and we have
had discussions in a variety of areas about this, that this is
an unsatisfactory arrangement for London. We have discussed this
with the Mayor and for a variety of reasons he thinks it is quite
a good idea. I will leave you to guess what the reasons may be.
The borough leaders could form some sort of senate for London
and meet formally with the Mayor, not on a weekly basis but in
public session with other key London figures and discuss the major
priorities and indeed decide the major priorities for London,
because quite clearly there are areas where we fundamentally agree
with the Mayor on the overall funding for London. There could
be a lot of positive work coming out of the Mayor chairing the
borough leaders and discussing the key policies for London and
reaching agreement. If there was a pool of pence, between one
and four, and an agreement had to be reached about what number
of pence went to Crossrail and what went to local discretion,
then I believe that that could be sorted out at that London-wide
level.
Q25 Mr Betts: Crossrail keeps coming
up so we had better focus on it. It is a pretty long-term project.
Presumably there will be money borrowed to fund it and there will
be a timeframe for paying the interest back. That takes an awful
lot longer than the supplementary business rate that can be raised.
How can anyone be confident the supplementary business rate can
play a part in the long-term funding of a project like Crossrail?
Mr Skinner: Detailed discussions
are going on between Treasury, TfL, Network Rail and the GLA about
the funding of Crossrail. Until we know what the contribution
will be from central government when they set out their proposals
in the Comprehensive Spending Review it will not be entirely clear
what the contribution expected from business would be.
Q26 Mr Betts: But it is clearly going
to be a much longer-term commitment than we are currently talking
about for a supplementary business rate agreement.
Mr Skinner: It is going to be
a very substantial amount, which will translate into quite long
term, yes.
Cllr Cockell: This is one of the
problems. Crossrail is at least £16 billion and the most
that an SBR at 4p across London and certain sizes of business
only could raise is about £500 million per annum. One part
of the SBR is that it would be time restricted. Three, four or
five years is the BID level. So you would need a succession of
support, ie three, four or five-year chunks at a time from business
in London that they still wished to continue with the funding,
with all the money going to Crossrail if Parliament decided that
the GLA proposal was the right one to adopt.
Q27 Mr Betts: Presumably you have
another slight problem in that you have to wait until the Treasury
decides how much they are going to put in. If the final element
is the contribution from the supplementary business rate but that
is limited and, like every other infrastructure project, Crossrail
goes over-budget at some point, where is the leeway to pick the
difference up?
Mr Skinner: There is already very
significant contingency built into the £16 billion figure
that Merrick Cockell outlined.
Q28 Mr Betts: And you will be out
of a job by then!
Cllr Cockell: I think we all might
be! I think I would look to the 2012 Olympics, if business was
to be the direction we went down, as being the way of doing that.
The London council taxpayers' contribution from the Olympics of
£625 million to my knowledge is capped at that and that was
the agreement that the Mayor reached whatever the overrun, if
there are any overruns, on the overall budget. I cannot think,
if this was going to be a way of funding Crossrail or any other
major scheme, that the risk could rest with the business community
in London.
Q29 Mr Betts: One of the aspects
of the supplementary business rate that might seem to be attractive
is that as and when issues arise that the business community think
needs to be addressed, over and beyond the commitments that the
boroughs can make with their existing revenue, the supplementary
business rate is there to enable a response to those. If it all
gets locked in to something like Crossrail, does not one of the
attractions of the flexibility of the supplementary business rate
mean there is no more to spend on those sorts of issues?
Cllr Cockell: I would agree with
that entirely.
Mr Skinner: It would depend on
if there were an additional measure which businesses supported
and whether an additional rate could then be supported by the
business community.
Q30 Emily Thornberry: I was interested
to see in your written evidence that you have said on conservative
assumptions London's net contribution to the national purse, which
is taxes generated less public expenditure received, is estimated
at anything up to £20 billion a year. Given that we are struggling
to establish Crossrail, presumably in those circumstances you
would not expect the SBR revenue raised to be shared in any way
between London and the rest of the country. Presumably you are
not in favour of any equalisation?
Mr Skinner: Not with regards to
the supplementary business rate. That also points out the reason
why indeed we would prefer Crossrail to be paid through other
means, but obviously the Treasury is requiring a contribution
from London businesses.
Chair: Thank you very much indeed. If
there are additional points that are not in your written evidence
that you want to add afterwards, please do write in with those.
| 
