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17 Jun 2009 : Column 345

It is also important to remember that their lordships rightly debated this change not in isolation, but in the context of BRS together with other potential burdens on businesses. If we add in the cumulative burdens of a revaluation of the standard, ordinary business rate, never mind the BRS, and the possibility of extra parking charges and other levies, we see that there is a danger of the straw breaking the camel’s back. That is why it seems to us that if there are to be BRS projects, it is only right and fair that businesses should have a chance to vote on that; otherwise, they will be caught in the invidious position of having a form of taxation without representation.

We will in due course move on to discuss amendments in relation to what are called joint BRS-BID levies. The only reason why I mention that at this stage is to own up to being a convert to BIDs. I was sceptical about them when they were first introduced, but I am now persuaded that they can be very successful. There is a key difference, however, in that for BIDs there is always a ballot of the businesses that are going to participate. That is an important lock in terms of both accountability and improving the scheme. That is not just the view of politicians. When the Bill was previously before this House, the Committee conducted some useful pre-legislative scrutiny evidence sessions. The evidence from the various business organisations was overwhelmingly to the effect that, whatever their views about introducing a BRS scheme at this stage in a recession, if there was to be added value it was crucial that there should be a mandatory ballot.

That point was made by a number of highly experienced Lords in the other place, and it has been reinforced by the CBI very recently. I previously asked the Minister about a letter from Richard Lambert, the director general of the CBI, to the new Secretary of State. In the context of the amendments, Richard Lambert states:

They are not coming at that from a Conservative party political point of view; I disagree with them on that particular issue of principle. The letter goes on to state, however:

In relation to the Lords amendments that we are debating, the letter states:

I could not have put it any better. That is a persuasive case from the CBI, representing thousands of businesses, and it looks as if the Government are persistently turning a deaf ear to those arguments.


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Certainty certainly relates to funding streams, but there must also be certainty for the businesses that are going to have to pay. The limit of 30 per cent. is in every respect an arbitrary one, because it is a question not just of the percentage that is funded, but of the amount that will fall to be paid by individual businesses. As has rightly been said, the nature of BRS schemes can vary. Some will be large, and some small, but as the Minister interestingly, and I suspect correctly, said, many involve significant capital expenditure. Even 20 per cent. of a very large scheme is a significant potential burden on businesses at a time when they can ill afford such cost burdens. That point appears to be missed.

I am sorry to have to say that the Government are also unwilling to seek greater business involvement. On Report in this House, there was a great deal of discussion about the possibility not only of having a safeguard for businesses through the mandatory ballot, but of mechanisms to ensure their greater participation in the development and ongoing oversight of BRS schemes. Ministers—previous Ministers, I hasten to add—uttered warm words about that. They said they would look at it, but nothing has emerged. I hope it may yet do so, but that does not give us much confidence that the Minister’s words about wanting to encourage participation between local government and business are actually going to be met with action.

That is a profoundly disappointing stance for the Government to take, so it is important to set in place greater certainty for business than the Lyons review set out, precisely because of the potential impacts on business. If a package had been developed that gave businesses greater safeguards, perhaps their lordships would have come to a different conclusion, but it has not been developed, and given the history of how this matter has been debated—we will come on to another piece of history in respect of a later group of amendments—I do not have confidence that warm words will be met with action.

Against that background, I am sorry to have to say that we have to maintain that the Government have misjudged the mood and misread the evidence, and that if they disagree with the Lords they will make the Bill worse than when it came back to this House from the other place. That will be a missed opportunity and a great let-down, and it will send precisely the wrong signals to businesses in this country at the current time.

Mr. Raynsford: It is a pleasure to follow the hon. Member for Bromley and Chislehurst (Robert Neill). He referred in his opening remarks to his longevity in his post in comparison with my hon. Friend the Minister, who has just assumed her post. I agree, and I wish him even greater longevity in his current post in opposition. He argued initially that my hon. Friend the Minister used the same arguments as the Government had used in the Lords and that the Lords had disagreed with those arguments, and he offered that as a reason for going along with the Lords’ position. What he failed to say was that the Minister deployed exactly the same arguments as her colleagues in the Commons did when this matter was debated here—and the Commons agreed with the Government, not the Opposition. Thus, we have a classic situation where the Commons has taken one view and the Lords has taken another, and I believe that the elected Chamber should prevail in those circumstances.


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3 pm

The Opposition argue that the business rate supplement is an inappropriate tax to introduce at this time, except in respect of Crossrail. We have heard before that classic illustration of the woolly thinking of the Opposition. If ever there was a scheme that involved a considerable imposition on the business community, it is Crossrail, which is a large and expensive—£16 billion—scheme. The BRS will make a significant contribution to that, albeit less than a third, and payments by business over many years will be involved. If the argument is that this is the wrong time for business to be making a contribution towards infrastructure investment, that argument certainly applies to Crossrail.

Of course, as the hon. Member for Bromley and Chislehurst knows perfectly well, business is supportive of Crossrail, rightly believing that the scheme is good for London, for Britain and for business, because it will create the circumstances that will enable economic growth to continue in London. That is why business is wholly supportive of Crossrail. Is it really credible to say that there are obvious benefits that business wants and welcomes from infrastructure investment, such as Crossrail, here in London, but that no such other investment that might be appropriate may be possible anywhere else in the country?

Robert Neill: I thank the right hon. Gentleman for giving way with his customary courtesy. How does he reconcile the fact that the very same business organisations that support Crossrail also say that there should be a mandatory ballot anywhere else? It is because they know that Crossrail is a unique project that has been uniquely discussed among people in London.

Mr. Raynsford: I must say to the hon. Gentleman that there is a total inconsistency in arguing that Crossrail is a good thing and should be supported without a ballot—we must remember that the business community is saying that there should be no ballot on Crossrail, because it is a relatively small element in the total funding package—and that that logic can apply in London, but cannot apply anywhere else. There is no sound logical basis for that particular case.

The logic behind having the BRS to support major infrastructure lies in the economic development potential. That is why the Government have introduced this measure. It is clearly right that if local authorities believe there is a case for a BRS, be it here in London or elsewhere, they should discuss the options with the business community and proceed only where there is clear, strong evidence that there are clear and definitive economic benefits. That is what I would expect to happen. The extent to which the business community is supportive of Crossrail in London is, of course, very much the product of the discussion that has occurred involving London’s business organisations, such as London First. They have long campaigned for Crossrail and clearly take the view that it should be supported by a BRS. They recognise that far from improving prospects and certainty, a ballot could be very damaging.

The hon. Gentleman argued the case for certainty, but I put it to him that the one thing that would be utterly damaging to Crossrail would be to say, at this point in time, “Oh well, there has to be a ballot. We don’t know what its outcome will be.” That would lead to inevitable uncertainty about the funding of this
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hugely important project. He recognises that and business recognises that. That is why business is saying that in the case of Crossrail there should not be a ballot. It is not just business or people who recognise the importance of Crossrail who are saying that; the Conservative Mayor of London, Boris Johnson, is adamant that Crossrail should proceed with a BRS and without a ballot.

Robert Neill: Will the right hon. Gentleman add, for the sake of completeness, that the same Mayor of London says that although he thinks that that applies to Crossrail, he has no desire for it to apply anywhere else?

Mr. Raynsford: The hon. Gentleman will know very well that the Crossrail BRS levy will be in place for some 20 years. I think that Boris Johnson, however ambitious he may be—he probably has ambitions to take over the leadership of the Conservative party in this place—will certainly not be in place for more than 20 years as Mayor of London. There is no question of any other BRS case coming forward in London, because the Crossrail BRS will take in full the maximum amount that is eligible to be taken from BRS under the legislation. No wonder the Mayor is able to take that view in the case of Crossrail and London. The overriding logic is that what applies in the case of London should apply to other parts of the country.

I have argued about the issue of certainty. I agree entirely that certainty is important, but where the discussion is about a relatively small contribution towards a major project that is being supported much more substantially by other bodies, it would be perverse if an uncertainty about the outcome of a business ballot could jeopardise the prospect of that investment taking place. So the argument about certainty cuts the other way in cases in which there is only a small contribution from the business community through BRS and the project is being overwhelmingly funded by other sources. That is the reason for saying that if a relatively small contribution is involved, a ballot should be optional, rather than compulsory. There is no question of saying that there should not be a ballot—if the local authority believes that it is right to have a ballot, it should have the option to hold one—but it should not be obligatory. I believe that it is right to leave an element of discretion to local government in this respect.

We have heard a great deal from Opposition Members about giving more freedom to local government, but the hon. Gentleman is now trying to support the other place in imposing shackles on local government and not giving it the discretion in these circumstances to determine whether a ballot should apply. He may or may not recall—I certainly do—the evidence given to the Committee by Local Government Association witnesses. They said that there should be no ballots in any circumstances. I do not agree with that view, and I believe that those witnesses were wrong on that, but I just remind him about listening to local government and giving it appropriate discretion within reasonable bounds. I believe that the Bill does that, that this House was correct to support the Bill in its original form and that the Members of the other place were wrong to make their substitutions with their amendments, and I hope that this House will reject the Lords amendments.


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Dan Rogerson: I am experiencing déj vu, albeit that some of the faces have changed; I, of course, welcome the new Minister. Unlike the hon. Member for Bromley and Chislehurst (Robert Neill), I have had the opportunity to do that, even if I have not done so formally, in Committee, where we have been discussing another measure that affects local government.

The Conservative party’s position, as set out by the hon. Gentleman, is that the BRS should be capable of being applied only in London for Crossrail. Throughout this debate, which is ongoing because a different conclusion was reached in another place, my party has said that it thinks that the BRS should be available to local authorities in other areas. However, given that these projects are likely to come forward as newer ideas and newer schemes that have not had the same amount of debate, and public and legislative scrutiny, as Crossrail, we feel that to give business confidence that its contribution is taken seriously a ballot is appropriate in all circumstances.

There are, thus, three positions on this matter—four if we take into account the position of the Local Government Association, as set out by my friend Councillor Knight, with whom I agree on all sorts of other issues. He does an excellent job as a local authority member on London, but I disagree with him on this occasion. Those four positions are: that there should be a ballot in no circumstances; that there should be no BRS beyond London and in respect of Crossrail; the Government’s position that the BRS should be available but that a ballot is not necessary in all circumstances; and the Liberal Democrats’ view, which has been agreed in another place, that a BRS is a useful tool and part of the package needed to move towards economic recovery in areas where infrastructure could play a big role in turning the economy round and that business would benefit from that, but that to demonstrate publicly that business supports a project, a ballot is necessary. I agree with the conclusion reached in the other place, and indeed my colleague and I put those arguments in Committee—and many hon. Members demonstrated their support on Report.

There are differences between the imposition of a further supplementary rate on business and the current situation in which businesses do not, in normal circumstances, get a say on the rate that is levied on them as a contribution to local services. We debated that in Committee at some length. We are asking for a further levy on business to fund specific proposals, and in those circumstances it is right to have a public debate—the consultation to which the Minister referred. It is clear from the information provided to us by representative organisations that the consultation is not felt to be enough—the matter should not end there.

We have discussed—and will again later—the BIDs system, which the right hon. Member for Greenwich and Woolwich (Mr. Raynsford) introduced in his time in government. All hon. Members have been impressed by its successes around the country. The evidence provided to us before our detailed consideration in Committee of the success of BIDs and the contribution they make to their communities was one of the best presentations I have seen. It is appropriate to have a ballot in all circumstances when a BID is proposed. Consultation will have taken place and local businesses will have given their agreement in principle, but a ballot is still
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crucial. Therefore, it is strange to argue that in the case of BRS, a ballot may be inappropriate in some circumstances.

Mr. Raynsford: In most BID cases—I cannot say all, because I am not sure of the precise figures—the BID levy is far and away the largest contributor to the BID project in the area. Voluntary contributions may be made by some property owners or the local authority, but the BID levy is the largest single part. Obviously, if the BRS is the largest single part of any scheme, there will be a ballot. That is the distinction. It is only in cases in which the BRS contribution is a relatively small part of the total that local authorities will have the discretion about whether to hold a ballot.

Dan Rogerson: Clearly, that is the Government’s argument—that it is possible to have a threshold beyond which the impact on businesses is not sufficient to necessitate a ballot. I do not agree. We could get into an argument about the right point for that threshold, but—as we have argued throughout—a ballot sends a much stronger message to business that the public sector, local government and the private sector must all engage with projects that will make a positive contribution to the future of an area. It is a clear and established system, and business is used to the BID ballot. It is much more simple and straightforward to say that a ballot would be held in all circumstances. For that reason, I am pleased that the other place accepted this amendment and I hope that this House, having considered the arguments expressed in Committee, which were ably supplemented in the other place, will accept that it got this wrong last time. We need to revisit this issue, and I hope that the Government will be slightly more flexible and agree that this scheme, which could make a real difference to communities around the country, should go forward on the basis of a ballot in all circumstances.

3.15 pm

Sarah McCarthy-Fry: I thank the hon. Members who have contributed to this debate. I am sure that the hon. Members for Bromley and Chislehurst (Robert Neill) and for North Cornwall (Dan Rogerson) will not be surprised to hear that they have not managed to persuade me with their arguments.

The amendment concerns a discretionary power to be used by levying authorities of the business rate supplement, and levying authorities will be required to carry out a cost-benefit analysis of any proposals and to demonstrate the relationship between the costs and the benefits. We have already made the commitment that the statutory guidance will make clear the importance of levying authorities involving business in the development and throughout the course of the project.

The crux of the argument is whether it is right that business should have a veto on a project for which it is paying only a small percentage of the cost, but which has the support of the local authority and of others who are not in large businesses but will benefit from the project. That is the heart of the issue.

The amendment in lieu goes a little further, and would allow levying authorities the flexibility to do the right thing. It would also enable local businesses to understand why a local authority has chosen to hold a ballot when not required to do so—because of the 33 per cent. limit—or chosen not to do so.


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I was a little confused by the contribution from the hon. Member for North Cornwall, especially his disagreement with Councillor Knight, who gave evidence on behalf of the LGA. The LGA’s position was that there should be no ballot under any circumstances, and that the guarantee to local businesses that the power will not be abused is accountability to local communities. I thought that that was the Liberal Democrats’ position and that they wanted to devolve decision making to local communities. It must be very confusing for voters when they hear one thing espoused in the House of Commons and a completely different view—

Dan Rogerson: We want to see far greater tax-raising powers devolved to the local level, but this issue involves a specific levy on business rate payers, and in those circumstances there should be a ballot. It is essentially a democratic measure, which we support at whatever level.

Sarah McCarthy-Fry: Nevertheless, the fact remains that the hon. Gentleman takes a totally different view from a fellow Liberal Democrat. Indeed, the LGA does not stop at not wanting a ballot. It also wants to raise the limit to 4p and for local authorities to have a free hand to decide what to spend the money on. The Select Committee also said that we should leave ballots to the discretion of local authorities.

The amendment in lieu creates the right balance. It would require a ballot if the contribution were more than 33.3 per cent., and introduce the additional safeguard that the local authority will have to set out in the prospectus its reasons to hold, or not hold, a ballot.

Question put, That this House disagrees with Lords amendment 1.


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