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Mr. Scott:
I want to elaborate a little on what I said in an earlier intervention, and I hope that the Minister will be able to respond to this point. Let us take Ilford as a prime example in relation to these measures. A BID scheme has been proposed, and Crossrail will also be coming to, and bringing great benefit to, Ilford. I fully support both projects, but some members of the community might not understand these proposals. They were eloquently explained by the right hon. Member for Greenwich and Woolwich (Mr. Raynsford), but they would have to be explained to people to ensure that no one voted against the BID scheme purely because they were worried about
the business rate supplement for Crossrail, when both projects are so badly needed, especially at times such as these, to encourage people into the area, bringing more money with them and creating more jobs. Both schemes are therefore vital, and I hope that the Minister will be able to put my fears to rest.
John Healey: I am grateful to my right hon. Friend the Member for Greenwich and Woolwich (Mr. Raynsford) for tabling this new clause. I pay tribute to him for the way in which he has prepared his case and pursued it, and not least for the way in which he has marshalled an impressively wide range of support for his proposal. It was a reminder to us all of why he is held in such high regard as one of my predecessors.
The House has already acknowledged, today and in Committee, my right hon. Friend’s essential role in introducing the legislation that enabled business improvement districts to be established. Despite the reservations of some Opposition Members at that time, we have now had several years’ experience of BIDs. There are more than 70 up and running in different parts of the country and I am happy to say that there is now all-party support for them, both here and in local government. The last thing we want to do is to undermine BIDs through the introduction of the BRS. The Bill enables authorities introducing a BRS to offset a BID liability against the BRS. This approach was based on our overall approach to the BRS. BRS is a new discretionary power for authorities to use, and it is consistent to allow the authorities to decide whether to use an automatic offset for BID payments, according to the needs of their area.
We have had a debate about automatic offsets in the earlier stages of the Bill, and I hope that we have now settled that matter. Even the chief executive of British BIDs, Dr. Julie Grail, made it clear that she was not necessarily advocating them. In our debates about offsetting, and in our general debates about the value of BIDs, it has become clear that offsetting might not be the only solution. It is also clear that there is some merit in involving property owners in business improvement districts on more than a voluntary basis. That case has been made again, in great detail, by my right hon. Friend this afternoon, and it is backed not only by BIDs but by leading organisations representing property owners, including the British Property Federation. It is also supported by the operation of exactly this arrangement in two areas of Scotland, where property owners are involved in BIDs in this way.
If we are to change the present arrangements—I want to make it clear that I am willing to do so—it is essential that we get these measures right. I am grateful for the encouragement by the hon. Member for Bromley and Chislehurst (Robert Neill) to look sympathetically at this approach, and I am grateful to the hon. Member for North Cornwall (Dan Rogerson) for his support for the approach that my right hon. Friend is taking and for what he is trying to achieve.
We have more work to do in ensuring that that measure would be optional for business improvement districts. We also need to do more work on determining how the arrangements for property owners would work alongside those for occupiers, and on putting in place a
satisfactory mechanism for collecting BID levies from the owners of occupied properties. I would like to get this detailed work done, in close consultation with my right hon. Friend and with the organisations that are supporting him. If we can do this, as I aim to do, I will then look forward to having the support of both the Opposition parties for this approach, and for any amendments that we might table in another place.
I hope that, on that basis, my right hon. Friend will feel that I have accepted his case and captured the spirit of it. I am determined to do the necessary work on the detail, and I hope that he will feel able to withdraw his new clause this afternoon.
Mr. Raynsford: I am extremely grateful to my right hon. Friend for that most encouraging response. I fully understand the need for further work to be done, and I hope that, as a result of that work, some of the searches for reassurance that we have heard from Opposition Members will be satisfied. I genuinely believe that this proposal holds out the prospect of not only safeguarding the survival of BIDs when BRS comes in, but of providing a more sustainable basis for the future of BIDs in the long term. Across the whole House, we recognise that the BIDs initiative has been successful in helping to enhance our towns and cities.
I am extremely grateful to my right hon. Friend the Minister, and I look forward to working with him. I shall make myself available to do so whenever necessary. I know that the many bodies outside the House that have supported the approach set out in new clause 2 will also want to play their role in helping him to define a practical way of moving forward. I very much hope that he will be able to table an amendment in another place; I would see that as an important step forward. Given the assurance that I have received from him, I beg to ask leave to withdraw the motion.
Robert Neill: I beg to move amendment 5, page 1, line 17, leave out paragraphs (b) to (d).
Mr. Deputy Speaker (Sir Michael Lord): With this it will be convenient to discuss the following: Amendment 3, page 1, line 20, after ‘Wales’, insert ‘, and
(e) the National Assembly for Wales.’.
Amendment 6, page 2, line 1, leave out subsections (2) and (3).
Amendment 7, in clause 3, page 2, line 44, leave out paragraph (b).
Amendment 8, in clause 5, page 3, line 29, leave out subsection (2).
Amendment 9, in clause 5, page 3, line 36 [Clause 5], leave out subsection (4).
Amendment 10, in clause 28, page 17, line 42, leave out subsection (3).
Amendment 11, in clause 29, page 18, line 21, leave out paragraph (b).
Amendment 12, in clause 29, page 18, line 44, leave out paragraph (b).
Amendment 13, in clause 30, page 19, line 6, leave out paragraph (b).
Amendment 14, in schedule 2, page 23, line 26, leave out subparagraph (3).
Robert Neill: We return now to the issue that has been fairly central to some of the earlier discussion of the Bill—its extent. My amendment replicates one that gave rise to a major debate in Committee. We contend that in the current circumstances the introduction of a nationwide power to levy what is calculated, on any view, to be the better part of a £600 million potential tax burden on businesses is inappropriate and likely to be damaging to the overall interests of the economy. This is not to do with the overall intellectual arguments for or against business rate supplements; the fact is that often in politics practical timing is a key consideration. For reasons that were well rehearsed on Second Reading and in Committee, we believe that there is a real risk that local authorities will feel pressured to resort to this as a means of raising funding right across the board.
An exception to that relates to the Crossrail project in London. The amendment would limit the scope of the Bill to London—to the Greater London Authority, the top-tier authority, which it is proposed, together with its functional bodies, will carry out the Crossrail project. The amendment would limit the scope to Crossrail because the Mayor of London, who was prayed in aid in the debate on an earlier group of amendments, has made it clear that although he wishes to be given the power to levy a supplementary business rate in relation to Crossrail, he does not intend to use it other than for Crossrail, purely on the basis of saying, “Let’s get Crossrail going.”
As a London Member of Parliament, I agree with the right hon. Member for Greenwich and Woolwich (Mr. Raynsford) about the importance of Crossrail to the London economy; I am conscious that it will have real and considerable benefits, and I am anxious to ensure that we do not impede its progress. However, there are differences between the Crossrail project and a nationwide roll-out of the scheme.
3.30 pm
Dr. Phyllis Starkey (Milton Keynes, South-West) (Lab): I would be grateful if the hon. Gentleman could clarify whether his argument rests on a view that any project in London is bound to be more important than a project elsewhere; whether he trusts the Greater London Authority more than local authorities elsewhere; or whether he is merely arguing in this way because the Mayor of London happens to be a Conservative and it would be a bit embarrassing if Conservative Front Benchers went against his express wishes.
Robert Neill:
The answer is, in fact, none of those things, as the hon. Lady might have discerned. Crossrail is a project where the funding package was agreed before the delivery of this Bill. There is a political consensus on Crossrail in London because the funding package, including the proposal to levy a supplementary business rate to fund an element of it, was announced back in October 2007 in advance of the last London
mayoral elections. It was well debated and well aired in London, where there was a clear consensus of view that it was a desirable way ahead. All the principal candidates in London had stood on the platform of supporting Crossrail and the funding package—certainly the candidates from all three major parties, and I think the Greens as well.
First, then, the proposal was well established. Secondly—let us be practical about these things—the deal was done, and unpicking the funding package would put the project at risk, and I do not intend to do anything that would put it at risk. That is a world away from taking a specific done deal, as the Government have done through this Bill instead of enacting a simple Crossrail enabling or financing Bill to deal with that one project and using that as an opportunity to roll out a nationwide project by stealth. That raises the prospect of significant increases in the tax burden on authorities that have nothing to do with Crossrail and are in different circumstances, and where some of the other tests that should apply to ensure that there is sign-up do not as yet apply.
Mr. Raynsford: The hon. Gentleman will be aware, because he has referred to this already, that the genesis of the business rate supplement was in the Lyons review. When Sir Michael Lyons considered this, he was well aware of Crossrail. He did not recommend that this should be a specific funding mechanism solely for Crossrail, he recommended but that a business rate supplement should be available throughout the country. Why is the hon. Gentleman departing from Sir Michael Lyons’s recommendation?
Robert Neill: Because in the current circumstances it would be wrong to do so. I will adopt, if the right hon. Gentleman likes, a classically Keynesian argument—when the facts change, I change my opinion; that was the view of John Maynard Keynes. My right hon. Friend the Member for Wokingham (Mr. Redwood) set out the facts very eloquently. It is not realistic, in the current economic climate, to place further tax burdens on businesses save in the most exceptional circumstances. I am prepared to regard Crossrail as an exceptional circumstance because of its national impact and the fact that there has been very significant debate beforehand. That does not apply elsewhere. For the reasons that have been well set out by my right hon. and hon. Friends, the inevitable cost pressures placed on local authorities in the current climate mean that this will be used as an additional form of revenue-raising regardless of the economic needs, and nobody desires that. That is why virtually all the business organisations have real concerns at the roll-out of a nationwide project as opposed to Crossrail.
The simple fact is that the world has moved on since it was thought that one could move fairly readily into the type of scheme that we are talking about. Under certain, different circumstances, and if carefully rehearsed, the scheme might be deliverable, but at the moment, if we embarked on a broad roll-out, it would, in our judgment, send exactly the wrong signals for business confidence. In the case of Crossrail, the issues are well rehearsed, and have been dealt with well.
Mr. Mark Field:
I can see precisely what my hon. Friend is trying to achieve, and he is absolutely right about the cross-party commitment to Crossrail.
Notwithstanding the fact that he has had reassurances from the Mayor of London that the power would not be used for any project other than Crossrail, is there not some concern on our side that central Government may decide, on the basis that London is included in the Bill and everywhere else is not, that no big infrastructure projects whatever will be funded by central Government? Might there not be an expectation that the funding would have to come from those powers? Perhaps, therefore, we ought to be even more specific about the fact that the powers relate to one specific project, rather than to one geographical area.
Robert Neill: That point may be taken up elsewhere. My hon. Friend highlights an issue that underlines the fact that right, across the piece and in a number of areas, there has been a shifting of burdens from central Government to local government in one form or another. There may sometimes be arguments for that, but let us be honest about it. What we are really seeing is the potential for economic development moneys to be moved away from the central Exchequer to local residents and businesses.
The validity of my hon. Friend’s point is reinforced by an interesting juxtaposition, which is perhaps wholly coincidental, although I do not think so. The Bill proposes giving local authorities right across the country the power to raise revenue from business for economic development purposes, and at the same time there has been a massive cut to the funding made available by central Government for the local authority business growth incentive scheme, which has been absolutely emasculated. It is interesting that the Treasury took away that money. The inevitable unwritten message was: “Sorry, local authorities; if you want those schemes to go ahead, you’ll have to raise the money from your businesses, rather than getting it from us.” That is ultimately a stealth tax, yet again.
Mr. Scott: Does my hon. Friend remember that in 2004, the then Mayor of London, Mr. Livingstone, addressed a meeting in the City, at which he clearly said, way before any Business Rate Supplements Bill had even been thought of, that a supplement would need to be put on business rates for Crossrail, should it be approved—it had not, at that time, been approved—and that it would be for Crossrail, and nothing else? Does my hon. Friend not agree that that only goes to show that the issue had nothing to do with party politics? The view was taken across the board.
Robert Neill: My hon. Friend is right. There were moments when the previous Mayor of London had flashes of insight with which I agreed. He genuinely attempted to hold his hand out to the business community. He was right to say that Crossrail was a one-off; it is a one-off, because of its scale and complexity, the sums that have to be raised, and its implications. I do not have any problem with saying that it should be treated in that way.
I know that Labour Members will say—I can see them working up to it already—that the measure somehow deprives other parts of the country of an opportunity. I have to say that if I were running a small or medium-sized business in another part of the country, I would not, in
the current circumstances, welcome the opportunity to have more taxation placed on me through the imposition of a levy. Now, when businesses are going broke, is not the time to do that.
Dr. Starkey: I am seriously disturbed by the thread, which has run through almost every contribution from Conservative Members, of disdain for local government and local democracy. The Bill is not imposing burdens; it is giving local authorities a power that they can use if they deem it necessary. I wonder how the hon. Gentleman reconciles his disdain for local government and the way in which it might use the power in the Bill with his party’s avowed commitment to greater localism. There is a total contradiction between the two positions.
Robert Neill: After 24 years’ service in one form of local authority or another, I will not take any lectures from the hon. Lady about commitment to local government. We have been demonstrating that and putting our money and our mouths where our principles are, right along the line. I will not take any mealy-mouthed comments from her on that subject.
We believe in genuine empowerment. The hon. Lady ought to abolish the cap, for example, if she wants to give localism to local government. She could abolish the comprehensive area assessment, comprehensive performance assessment regime if she wants to give localism to local government. We will not take any lectures on localism from any Members on the Government Benches.
The measure has a ratchet effect. It gives a power to impose tax, but that is coupled with a reduction in central Government funding. It is a nudge, nudge, wink, wink suggestion whereby Government are saying to local government, “We can’t provide funding any more because, thanks to the current Prime Minister, the national coffers are empty. You instead impose the cost of these desirable projects on to your businesses and your residents.” That is what it is about, and that is why Labour Members protest so much—they know that they have been found out.
Mr. Binley: Does my hon. Friend agree that the Government clearly trust local government so much that they had to put a cap on the local rates applied in every district? They do not trust local government. That is the problem, and that is the point that my hon. Friend is making.
Robert Neill: My hon. Friend is right, as ever. I note his long service in local government and the practical job that he did as portfolio-holder for finance in his county council, when he attempted to deliver value for money for people in Northamptonshire. We do not just trust local government; we have been practitioners of local government for much of our careers, so we speak with practical authority.
Robert Neill: I give way to the right hon. Gentleman, whose views on the topic I respect.
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