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13 May 2008 : Column 404WH—continued

By a happy coincidence, I was in Easington in the north-east recently, at the invitation of Mr Cummings. I witnessed what is, in my view, one of the strongest schemes in the country. The relationship between the contractor and the contracted other partners brings greater added value to the scheme. I do not know
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whether that would be possible under the right hon. Gentleman’s idea, but as I said, I have an open mind.

I should like to defend the reputation of Eaga and the Warm Front scheme. To answer a point that has featured in previous debates, although not today’s, Eaga has subsidiaries that deliver some parts of the scheme. Proper tendering and procurement processes are of course in place, as well as independent assessment. Eaga, as the scheme deliverer, is paid an administration fee based on the number of houses, so it is not in its financial interest to interfere in the market in any way. I hope that those two assurances will be publicised. I am keen to send a message to Eaga employees and contractors that we think that the scheme is doing a good job. That is not to say that it cannot improve. The right hon. Gentleman has shown us one way forward—a pilot in his area—to which I will of course give due consideration.

The other issue that the right hon. Gentleman has raised in various debates and on BBC programmes relates to timetables. It is okay for me to say that Warm Front is not an emergency service, because it is not, but clearly, as a Member of Parliament, I do not want constituents not to have heat or hot water. That is an appalling situation. If it happened under my local authority, I would be furious, so I need to be furious if it happens under Warm Front as well. We must ensure that timetables are kept to. I have met Eaga to discuss that point, and it has responded positively, but we must build into policy some guarantees and assurances to prevent the sort of thing that happened to the right hon. Gentleman’s constituent, whose name has fallen from my memory, I am afraid, although I should not publicise individual cases anyway. We considered the case that he raised with me, not just specifically but as an example of a generality.

We are debating how to improve the scheme. I am pleased to hear that Eaga has responded positively to the right hon. Gentleman’s investigations. Other Members echo that, and I have met Eaga representatives and been reassured by their commitments. They have also put to me the other side of the story, which involves the many thousands of grateful consumers who have written to thank them and, through them, the Government and the taxpayer. I am determined to ensure that the scheme is the best that it can possibly be, and I thank the right hon. Gentleman for his positive approach in putting forward his ideas without seeking to score cheap political points. That is not his way of doing things, and he should be commended for it. My obligation in response is to take his ideas seriously.

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Business Improvement District (Coventry)

1.30 pm

Mr. Geoffrey Robinson (Coventry, North-West) (Lab): I should like to thank you, Mr. Cummings, and through you, Mr. Speaker, of course, for granting this Adjournment debate on the business improvement district programme under way in Coventry. It is a very important topic to big and small companies in Coventry—particularly to the medium to small ones.

The matter was brought to my attention at a meeting in early March by three small companies operating in the Coventry business park. I was then contacted by the university of Warwick and a company on the Warwick science park, representing many more companies, which brought to my attention similar dissatisfaction. I have been very active locally in expressing their disquiet about the expense that the process has involved them in, and I have let it be known that I intend to probe the Department for Communities and Local Government on the matter—I thank the Minister for attending this debate on behalf of the Department. We have tried to take the matter further and to get answers to a number of questions.

To my knowledge, neither in my office in Coventry, nor down here, have we been contacted by a single company in the whole of Coventry in support of the BID. In their five-year plan, the BID promoters laud themselves for their Herculean efforts to contact everybody who needed to be contacted. It struck me as strange, therefore, that three quite important companies—they might be small, but in the context of a small business park, two of them are certainly quite large—had no knowledge of being contacted, in writing or in person, by the BID company.

Out of interest, I checked at the reception of Eu-Matic—one of those companies—and asked whether anyone remembered seeing a letter to that effect, and was told that they did not. Neither the managing director, the general manager nor the finance officer had any recollection of it. The first that they knew of the matter was when a bill came through the door for £16,000—if you please—which is an awful lot of money. It represents an additional 1.5 per cent. supplementary business rate for a small company that exports about 60 or 70 per cent. of its products, which are, believe it or not, components for the automotive industry.

In this day and age, that is an achievement, given that the UK has become less and less a centre for the manufacture of component parts—we still do quite a lot of assembly—which are increasingly manufactured outside the UK. That company has survived through making huge investment in very good product development and manufacturing technologies, and it has remained competitive when the world is going global and when such metal-based door components are increasingly sourced out to the low-cost economies. Those at that company said that they knew nothing about the new rates; as far as they were concerned, they had not been contacted by the BID promoters. As Members can imagine, therefore, it was a bitter blow to learn about the £16,000 supplementary rates bill from the BID promoters, the idea of which is to ensure that Coventry continues to be seen as the best place from which to do business.

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I told the chief executive of the BID company that the best thing to do to ensure that Coventry is seen as a good place to do business from is to reduce the business rate, which would be welcomed all round. People would flock to Coventry if the rate was significantly reduced; otherwise, it will become increasingly difficult to sell. However, the BID company claims to have contacted everybody. On 18 March, the chief executive, Mr. Stephen Welch, assured me not only that the three companies with which I had the first meeting—Eu-Matic, McBride and Palmer and Harvey—were contacted in writing, but that they all received an individual visit. That is consonant with the sort of claims that it makes in its five-year plan about the depth and breadth of the consultation.

The companies, however, have no record of such contact—certainly, the managing directors and finance directors of each of the three companies could find no trace of it. I replied to Mr. Welch, “You must have an audit trail. A note must be made of every visit, and it must be dated. You must know who went, whom they saw and for how long.” That was some two months ago, but I still have not received anything from him. One begins to wonder, “Where is this paper trail? Where is this evidence? Are they quite sure that they did carry out this consultation to the extent that they claim?”

I turn my attention to another company that came to see me in the second wave. It is based on Warwick science park, which works very closely with the university. Dr. Colin Fink is medical director of the company, which deals with diagnostic medical equipment of the highest technical quality. His calculation of the participation in the vote—I shall leave a copy of this quote with the Minister for him to consider—is that

in Coventry—

Even if we calculate that percentage using the restricted level of properties that the BID company, rightly or wrongly, wants to use, it still comes out at only 18 per cent. in favour.

I put it to every Member of Parliament, the Minister, the Department, the BID company and the council that 18 per cent. is no basis on which to proceed with a 1.5 per cent. increase in business rate. One could argue that that is where the BID has set the bar. However, if it wants to push through a 1.5 per cent. increase, the bar for participation must be set a lot higher than 18 per cent. of the businesses eligible to vote.

Other companies that I have met and those speaking alongside the university—they are very much on the ball—make no bones about it: they were contacted and told all about it, and they voted against it. The whole of the university voted against it. Everyone on the science park voted against it. Indeed, not only did they vote against it, but they cannot accept the so-called improvements or additional services being offered by the BID company,
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because standards have been lowered so much that they would not be allowed to continue to train.

The medical equipment company is being told that it cannot have its full-time receptionist. It has to have a van going around every so often, but it does not know how often. It has to have a single camera replacing its fully fledged, proven, tested and accepted system of individual reception for every item that comes in. Given the business of the company concerned, one imagines that such items would include viruses and other pathological goods.

Those people have contacted me. No one has come forward to support the BID. The whole process leaves a great deal to be desired. One cannot set a bar so low that 5.8 per cent. or even 18 per cent. of those voting, not those eligible to vote, is acceptable. People should not claim that they have carried out an effective and extensive survey or consultation—all those words are in the five-year plan—if only 5.8 per cent., or even 18 per cent, vote in favour, and that is after putting through a real selling document. The process has not been conducted on the basis of what people would like, although the BID company pretends that it has. However, anyone who reads the five-year plan can see that it is a document of pretty slick salesmanship—to put it quite bluntly. I wish in no sense to impugn the integrity of any member of the BID team, the council or any of the organisations involved. However, this is not a consultative document. It is a business plan proposed, as the BID team says, on the basis of deep, intensive consultation with the companies concerned. There is no need for me to belabour the point; we know that participation was minimal and that only a minimum of the majority voted in favour of it.

Anyone who reads the document will find that its advertising is subliminal. It suggests that everyone is madly in favour of the plan. The document claims that circulars and junk mail communications were not used to let people know about the ballot. However, when I tried to find out what was used for the ballot, I found a four-sided document with the details of the ballot tucked away on page three of four. It was written in small print and took up only a quarter of the page, and that is all there was about the ballot.

A proper timetable was laid out. I have the document here. It says, “BID ballot” on about a third of the page. It then says:

On the front page, it says that Jaguar is all up for it. It has the feel of a selling document. I do not want this to be taken further than this Chamber, but it reminded me of the mis-selling of pensions, which had to be cleared up in 1997 by one of our former colleagues, Helen Liddell, who is now high commissioner to Australia. The same sort of technique was used. People were trying to sell something for much more than it was really worth. All that customers were really being sold was puff and smoke.

Mr. Jim Cunningham (Coventry, South) (Lab): My hon. Friend and I often collaborate on a number of issues that affect people in Coventry. One of the things that worries me is the fact that we are trying to reduce the amount of so-called red tape on small businesses. About 20 years ago, when we had the big recession in Coventry, there were lots of efforts to establish the business parks, which is the background to our concerns.
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This plan may have good intentions, but it could quite easily deter investment from coming into Coventry given the present economic climate. Those matters should be considered when we look at the levies mentioned. I can remember the justification for stopping local authorities levelling a business rate. The argument was that the rate was about 3 per cent. of the overheads. In fact, it was about 1.5 per cent, and here is an increase of 1.5 per cent. Therefore, without impinging on the integrity of the company, the plan alarms me. Given the economic situation, the matter must be taken very seriously.

Mr. Robinson: As my hon. Friend has said, we have worked closely on many such issues, and I am very pleased that he has come today and contributed to the debate. Some of the companies are in my hon. Friend’s constituency. This is not a constituency issue; it is a Coventry-wide issue, and he has lent his full support to it. A 1.5 per cent. increase on the business rate is huge, especially as everything else is going up. What a time to do it!

Time is marching on, and I must give the Minister some time to reply. I think that the real reason for the increase is that the city and its organisations, such as the chambers of commerce and CV One, are losing Business Link funding. They are losing funding from the European regional development fund and from a number of other sources. They want to keep themselves going. The chamber of commerce may even be losing the support of its members and needs new funds. The city and its organisations are trying to get a 1.5 per cent. increase in the business rate—I cannot believe that they think that they can get that through—to make good all the things that they are losing. They then ask, “What sort of basis shall we sell it on? What sort of positive benefit shall we offer to these people?” They then come up with two ideas. One is security, and we have seen what that means for one firm—the company on Warwick business park. If it adopts that security, it goes out of business. We know what it means for the others as well. They have perfectly good security already. One of them is part of the Canadian group, Eu-Matic. They will not get investment. Some £16,000 has gone out of their income at the drop of a hat. So the measure will have the opposite effect to the one desired. That is why we are bound to question it.

Therefore, I do not think that the process has been successful. The representations made in the document about what the BID company is going to do need to be considered from a legal point of view. I am not sure that it is not on the very verge of illegality in a number of respects. Have the Department or the BID company taken legal advice? There are several respects in which I think that the company needs to take legal advice, one of which is in respect of UK law—it is probably all right there. I am no lawyer, but I have some experience of the implication of legality in taxation matters. However, I am not so sure about EU law. Imposing a tax on one group of companies but not on another could be open to challenge. Have we had legal advice on that? If we have, I would be very interested to see it. What about the European Court of Human Rights? Are we sure that there is not too great an imposition on one company as opposed to another? That is a separate point. I think that the whole process could be susceptible to challenges
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on both those fronts. I should like to know that the proposal has been considered and is watertight in both those regards.

My third point relates to the representations. Are we sure that they are capable of being fulfilled, that they have not been oversold and that we are not committed to doing things that we are not able to deliver? Are we sure that the legality in those three respects is in good order? It is mentioned that reductions can be negotiated with the landlords of existing estates. Have we negotiated those reductions and will they be of the order claimed in the document, which is 40 to 60 per cent.? Has that been done?

The BID has been up and running for 10 months now. Outside the city centre, which I understand is covered by CV One, why is it that sports, recreation and leisure facilities are excluded? A lot of the promotional money is directed precisely to their benefit. For example, it is directed at hotels and sports facilities. People coming into the town from outside benefit from everything that is being done there. Despite that, we are making another class of company pay for it. That class is defined very carefully in the document.

I do not wish to take up all the time, and I am conscious that my hon. Friend the Minister will not be able to answer all the points that I have raised today. I will let him have a series of question that I would like answered. He will no doubt tell me that we are launched on the BID now and that it will take at least three years. If Advantage West Midlands does not come in with its money, it will take at least five years. He might say that it is too late to do anything about it now and let us see how we go. My reply to that would be simply that we should not go headlong into it. We should re-test it seriously. It is in the open now, and companies know about it and have received their first bills. We know how it is with a tax reduction—we do not notice it until it arrives on the doorstep. It is the same with a tax increase. People did not realise about the 10p tax increase that was announced a year ago until it landed on their doorstep, although some of us tried to mention it. So it is in this case.

Small companies are competing and do not have time to study the matter. Universities are used to dealing with forms, and I can see why they cottoned on much earlier. The matter is out in the open now, and we should test the water in a non-binding way. We should reissue the offer and say, “This is what is now being offered to you. Do you still wish to continue with the BID?” Let us see what response we get. If we get a favourable response, I shall withdraw and say, “Well, despite all my worst misgivings and the representations made to me by these few companies, of course I will let it go ahead.”

However, if we were to get an overwhelming majority, with a high turnout this time, saying, “No, we really didn’t realise what it was, and we don’t want it,” perhaps we could find something else to do with the money. It is pointless to have money going in that nobody gets any benefit from except the people who are not paying anything towards the BID, such as Coventry chamber of commerce, who are getting back Business Link money, and some of the hotels.

We need to call a halt to further commitments, and it will take a matter of three months to test the water and say, “This is what it’s really about. This is how much you’ve got to pay, and this is what you’re going to get.
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Do you wish to proceed, or are there alternative ways in which we could proceed?” That does not mean undoing everything, but it would mean people being much happier about a situation that they are currently deeply dissatisfied with.

1.51 pm

The Parliamentary Under-Secretary of State for Communities and Local Government (Mr. Parmjit Dhanda): It is a pleasure to work under your stewardship, Mr. Cummings.

I congratulate my hon. Friend the Member for Coventry, North-West (Mr. Robinson) on securing the debate. He will know even better than me, from his days as a Minister, the power of such debates and the power of Westminster Hall and the spoken and written word here. I am sure that that will echo in Coventry this evening. I also congratulate my hon. Friend the Member for Coventry, South (Mr. Cunningham). Hearing one colleague espouse an issue often makes it a matter for concern, but when a couple of them make their constituents’ case together, that amplifies its importance to local people.

My hon. Friend the Member for Coventry, North-West, said that he knew of no companies that supported the business improvement district programme. I have been talking to my officials about the issue, and they tell me that 54 per cent. of businesses that voted were in favour of the BID, although my hon. Friend made some interesting remarks about the number that voted.

My hon. Friend made an interesting point about turnout. As I am sure he is aware, a vote requires not only an overall majority but an overall majority of the rateable value of companies voting. He mentioned the turnouts for the votes on the BIDs in Coventry—38 36 and 33 per cent. He is right that we need to get better turnouts. Having said that, many wards in local elections in my constituency had lower turnouts than that, with more than two options to choose from. The system that we use for elected representation means that even a lower proportion of people voting can result in people being elected and decisions being made. That is not unusual to us in this country, but my hon. Friend made a pertinent point about the need to have a high turnout in ballots. I agree wholeheartedly that the higher the turnout, the better.

My hon. Friend asked about legal advice, and I undertake to write to him to give more clarity on that. He also mentioned the European Court of Human Rights. From my experience, legislation is ECHR-proofed before it goes through the House. Again, I shall write to him to provide more clarity.

I can understand why my hon. Friend has an interest in this area of policy, as there are two BIDs in Coventry, one in the town centre and one covering the whole of Coventry, as he mentioned. I know that he supports BIDs as a policy, even though he has anxieties about one of the Coventry ones. There are about 71 of them now, and that is the only one that has caused such local difficulties.

Mr. Geoffrey Robinson: I hasten to say that I am raising no doubts about any of the other BIDs that are proceeding. My call for a halt and review at this stage relates only to Coventry.

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