Q
54 Mr.
Raynsford: So the modelling done by Crossrail, which shows
substantial business benefits in all parts of the London—not
just along the route—and huge benefits in key points on the
route is
wrong. Jane
Milne: It is not just our modelling that shows that.
I believe that the Mayor of London’s modelling also shows that
retail benefits to a lesser degree than other sectors of the
economy.
Q
55 Mr.
Raynsford: So why is the Mayor of London so supportive of
the
Bill? Jane
Milne: Again, that is a question that you need to ask
him, not
me.
Mr.
Raynsford: Possibly—we may have a chance to do
so.
Q
56Robert
Neill: May I just ask about thresholds? I am told that
£50,000 is postulated as the threshold. It is not in the Bill.
How adequate do you regard that, and what will be the position when
revaluation takes place in
2010? Jane
Milne: Clearly, revaluation will have a significant
impact on that, particularly since it was based on April 2008 values,
which clearly do not reflect the world that we are in today. One of our
key concerns is that retailing will have a different experience and
that the impact will be skewed. We are also concerned that there may
well be regional implications for having a specific cut-off with
different balances in different parts of the
country.
Q
57Robert
Neill: Can you elaborate on those two points? You said
first that the effects may be different from 2008. What has been
happening to retail since then?
Jane
Milne: As Mr. Field mentioned, thankfully
we have seen a reversal in the movement of rents. Some rents have
actually come down for some retailers although, given that many are
locked into upward-only rent reviews, that is by no means true of all
of them. It is only where vacant properties and new leases are being
taken on that we are really seeing the benefit of that. However, given
that we have vacancies on high streets, and property owners are taking
a rather different attitude to the market, there has possibly been more
of a shift within the retail sector than other sectors. There is a
shift in the balance between our and other parts of the
economy.
Q
58Robert
Neill: It is represented that you are somehow
unrepresentative of your membership. That seemed to be the drift of
some questioning. What is your answer to
that? Jane
Milne: Of all the issues that we look at—we
look across the whole range of things impacting on retail—this
is probably one where there is the most unified voice and the most
stringent urgency in what members are putting to us that we need to
make progress on. We need to get the business rate system changed, so
that it does not impose these huge increases—30 per cent.
increases in costs—that are coming down the track over the next
couple of
years.
Q
59Robert
Neill: Thirty per cent. increases in costs—how do
you quantify
that? Jane
Milne: That is taking the sum of this year’s
annual uplift—based on the September inflation rate, which is
probably around twice what it will be announced to be this week and
certainly well ahead of overall annual inflation, which could be
deflation this year—with the revaluation coming forward in 2010
and the potential in what the business rate supplements could bring
forward.
Q
60Paul
Farrelly: May I just ask a hypothetical question? What if
the legislation were to be amended to make a ballot—governed by
a dual-key mechanism—mandatory? On the basis of your views,
would it be fair to say that you could mobilise your many thousands of
members in London? Would you expect them to go out and vote against
Crossrail in droves, if Crossrail could only be funded with the
participation of the business rate supplements
scheme? Jane
Milne: Of course, the dual-key approach takes account
of both the numbers of business rate payers and the value that each
pays. At the most generous assessment, our members would remain 25 per
cent. of the value. It would be an overall response from the business
community as a
whole.
Q
61Paul
Farrelly: I am thinking of the numbers really. It would be
fair to say that, if those circumstances came to pass and you had those
protections, your consortium would seek to mobilise many thousands of
shopkeepers to vote down a system for London and therefore imperil
Crossrail. Jane
Milne: I do not think that we would need to mobilise
them. They are raring to go
anyway.
Q
62 Mr.
Lee Scott (Ilford, North) (Con): Do you think that the
Government’s proposed requirements for the consultation with
local businesses are sufficient? If not, what would you
suggest?
Jane
Milne: We believe that the proposals need to be
strengthened in a number of areas. I have already talked about the need
for inclusion in discussions to produce the initial prospectus. The
consultation process needs to be more than a process to be gone
through—to be one with a bit of bite to it and having a
mandatory ballot at the end. That would result in genuine engagement,
which would result in quality proposals that would genuinely answer the
issues that local authorities are trying to
address.
Q
63 Mr.
Scott: It is proposed that a ballot of local businesses is
required only if the supplement is to fund more than one third of the
total cost of the project. However, is it appropriate to allow a ballot
in other circumstances, when the authority may wish to hold
one? Jane
Milne: I think so, precisely because that would help
develop and bring forward better quality
proposals.
Q
64 Mr.
Scott: We have just heard from Paul Farrelly that you
could mobilise people against a particular project—Crossrail was
mentioned, but let us move away from that. If something was of benefit,
would you mobilise in the other direction, to be in
favour? Jane
Milne: What we have done with BIDs is to work with
British Business Improvement Districts, whom I believe you will be
seeing later today, to help draw up guidelines of what we think are
particularly good approaches and the right sorts of projects to bring
forward. That sort of approach, where we can
give—
Q
65 Mr.
Scott: Could you give me an example of the right sorts of
projects to bring
forward? Tom
Ironside: What we say in the criteria document
circulated to BID proposals that are brought forward is that the
proposals should demonstrate a clear business benefit, and that that
benefit should be quantifiable and measurable. The businesses concerned
should then be able to make a judgment on the basis of the information
that they are presented with. So, it will vary from case to case. It
may relate to addressing retail crime, or to improvements to the
physical environment—to cleanliness. In many cases, it is about
delivering quantifiable benefits within their trading
environments. Jane
Milne: That is because we recognise that we
have a responsibility to contribute to the development and enhancement
of
communities.
Q
66 Mr.
Scott: I have a final question on the modelling that you
have done. Obviously we are in a recession and things are difficult,
but does the modelling take into account that the recession will
end—whenever that may be—and we could be into a boom
period, and businesses could benefit considerably from various projects
being
suggested? Jane
Milne: The modelling that we did on Crossrail was
before the R-word was mentioned and therefore we were looking forward
to—
Mr.
Scott: I apologise for mentioning the R-word. Perhaps I
should have said credit crunch, but recession is the
word. Jane
Milne: At that stage we were not
envisaging that there would be a downturn. We are not looking
at a growing industry at the moment; we are looking at a
shrinking one. That was not included in the modelling, so, if you like,
it is already an over-optimistic view of the world, in the short
term.
Q
67 Mr.
Scott: I find that interesting, because I have seen some
figures for Crossrail—the project does not affect my
constituency directly but it does affect the neighbouring
one—which showed that businesses, not in Oxford street but in
the suburbs, were going to benefit considerably from the extra people
that Crossrail could bring in. That study was done before the current
climate, and the figures might be different now, but that does not mean
that in the longer term there could not be bonuses for businesses.
However, you say that even when business was good the modelling showed
that people would not benefit from
Crossrail. Jane
Milne: Retailing will benefit but at around only half
the rate of the contribution that the sector is being asked to make.
So, in the end, it is a net loss to
retailing.
Q
68 Mr.
Andrew Love (Edmonton) (Lab/Co-op): We are finding it
difficult to understand that your modelling seems totally contrary to
all the other modelling that has been done on this matter. That point
was raised not just by Mr. Scott but by Nick Raynsford. Are
you looking in the short term? What is your time scale for the
so-called benefits that you talk about? How narrow are the assumptions
that you have made about the boost to business from huge numbers of
people flowing from outer to inner London? Just give us a taster of how
you have assembled that
modelling. Tom
Ironside: I will give you a little more background on
the modelling that was undertaken. It was carried out by Oxford
Economics and looked at a London-wide picture. It estimated a cost of
£34 million per annum to the retail sector in London from the
time that the BRS was introduced, and at the same time it estimated
that the benefit once the Crossrail project was completed would be
£15 million per annum. Those are the headlines of the research.
We have the research document, which I am sure has already been shared
with Government Departments. We would be only too happy to provide you
with it, as well. I do not have a copy with me—it is a 10 or
12-page document—but we would be more than happy to share it
with the Committee if that were
useful.
Q
69 Mr.
Love: We would obviously want you to share that with us,
but we are trying to square the circle here. As Mr. Scott
said a few moments ago, we are talking about some 600,000 additional
people living in east London, who will be carried through Crossrail
either to work or to make purchases at all the stops along the line.
Looking superficially, it seems that there would be significant
benefits not just for central London but all along the Crossrail route,
yet you suggest otherwise. I am trying to cope with how you have come
up with a different set of figures from almost everyone
else.
One of the
questions I critically want to ask is, what is your time scale for the
figures that you have produced? In the submission by the Mayor of
London, he
says: “The
long-term benefits of Crossrail to business will far outweigh the costs
to them of the BRS.”
He goes on to
say: “All
London’s boroughs will benefit from
Crossrail”,
not just those through
which Crossrail passes. That is a definitive set of findings. The Mayor
would not have come up with that if he had thought there would be any
challenge. But you are saying not only that it does not work but the
benefit is only half the cost to retailers. We have always assumed that
retailers would be among the main beneficiaries of this scheme. How do
you come up with these different
figures? Jane
Milne: I would like to understand why you think the
existence of a railway will mean that people will want to buy more.
They may well buy more on Oxford street and less in their local stores.
It is a question of looking at what the overall net benefits to retail
are.
Q
70 Mr.
Love: Let me put it to you this way. Where the underground
has been extended, all the evidence suggests that there is a
significant benefit, not just in terms of people flows but in terms of
the value of properties close to the underground. It has to be assumed
that that will be the case with Crossrail. It will carry huge numbers
of people, albeit perhaps not more than the overall underground network
carries, yet you are asking us to believe that retailers will not
benefit. I find that incredible, especially as almost everyone else
suggests that there will not just be significant but overwhelming
benefits to business from the building of
Crossrail. Jane
Milne: I think you are lumping everybody into the
term “business”. Our point is that there will be
different sectoral effects and we need to reflect those in the
contributions that each sector is asked to give. Just because the value
of a property has increased it does not mean that the value to the
occupier has
increased.
Q
71 Mr.
Love: Let me put you on the spot. How narrowly did you
draw up the research? Did you say, “We want you to tell us the
bottom-line effect on retailing business, compared with the cost,
without taking any of the wider benefits into consideration?”
Did you look at this over a longer time scale, or did you set it in the
short term? What assumptions did you give to Capital Economics to draw
up the figures that you are now telling
us? Tom
Ironside: We did not narrowly prescribe the scope of
the research in that way. It was a genuine attempt to understand what
the impact would be on the retail
sector.
Q
72 Mr.
Love: Okay. We will need to see the figures.
Let me ask you
a final question, again trying to square the circle. As has already
been said by Mr. Raynsford, all of the business
organisations in London have come out strongly in favour of Crossrail,
and there is a significant retail element within them. Yet you are
telling us that your members are overwhelmingly opposed to this Bill
and what it will achieve in terms of building Crossrail. How
representative is London within the overall British Retail Consortium?
Does it account for 11 or 12 per cent. of your membership, or a much
higher proportion? How representative is London and have its views in
retail terms been taken on board regarding your attitude to this
Bill? Jane
Milne: In so far as we have the overwhelming majority
of the major brands, which have a significant presence in London, those
companies are clearly taking a view on both the specific Crossrail and
London
question and the broader question of BRS across the rest of the UK. Our
membership includes a number of companies which operate only in London,
so their views are also
reflected.
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