Q
93 Mr.
Raynsford: I hear that message, but I simply want to come
back to the question. A chamber of commerce in a particular locality
might believe that it was extremely important to get a major
infrastructure development, which would benefit business and towards
which it would be reasonable for business to make a contribution. If it
looked at London and saw Crossrail being built on exactly that basis,
how would you explain to it that it cannot do that even though it wants
to do it because the Bill does not apply outside
London? David
Frost: We are not saying that. We are saying that
there needs to be some coherence in the method of funding such projects
and a far greater involvement by the business community in both
deciding what the projects will be and playing an active role in
selling the concept to the wider
community.
Q
94 Mr.
Raynsford: I think you said in your evidence that there
has been active involvement by the business community in London in the
funding of Crossrail. It is very supportive of Crossrail, and
regard it as a successful model. Let us remember that this is for a
scheme that has been talked about for 20 years. It has taken a very
long time to get to the point where, at last, it appears to be
proceeding because there is now a broad-based funding model that looks
credible. Why should that option not be available to any other part of
the
country? David
Frost: We are not saying that it should
not be, but there must be a decision as to what we
going to run with. Are we running with a business rate
supplement? Are we running with a business improvement district? Are we
running with a workplace car-parking levy? Are we running with
congestion charging? People can make their mind up about which way we
are going to run, but they are concerned that it will be just a
mish-mash.
Q
95 Mr.
Raynsford: With respect, we are in a Committee dealing
with the business rate supplement because that is what is on the
agenda. You have given us evidence suggesting that you are sympathetic
to its application in London for Crossrail, but you do not see its
potential value outside London. I am trying to get to the bottom of the
question of what you will say to your members if they want to proceed
on a similar basis as London, are in agreement with the local authority
and see a project as necessary, but you have opposed the power to make
it possible.
David
Frost: No.
Q
96 Mr.
Raynsford: So you are not opposed to the Bill’s
powers extending outside London?
David
Frost: What we are saying is that we want a
determination of which route authorities are going to take and the
clear involvement of the business community. Chambers representing the
business community are far more welcoming of the BID concept, as
opposed to the business rate supplement, because there is far greater
business engagement with BIDs than with
BRS.
Q
97 Mr.
Raynsford: I am sure that we will come back to that, but
can you say for the purposes of clarity that you are not opposed to the
powers in the Bill being available outside London, obviously subject to
the issue of votes and so
forth? David
Frost: If communities want to examine that, they can
do—yes, absolutely.
Q
98 Dan
Rogerson: I suppose the issue is that they cannot do that
at the moment, so the Bill is important in its wider scope beyond
London, to allow communities to do so. Perhaps we need to explore that
message and return to it later.
We have not
dealt with ballots. Is that what you are getting at? You have talked
about engagement with the community. The message from our previous
witnesses was that the Bill would be far more reassuring to their
members if a ballot was a standard part of the imposition of a
supplementary rate.
David
Frost: The ballot and the timing of a BID are one of
the measure’s most attractive elements because, first, they have
forced the business community and agencies, particularly local
authorities, to find out what communities want. Secondly, they have
forced them to get out and sell the concept of a business improvement
district, and explain the added value. The BID then goes to a ballot.
We think that the simple majority and the measures concerning the
aggregate rateable values form a good twin-track approach. At the end
of five years, you have to go and resell the concept; that is democracy
at work and it is a good thing. That is why the BID concept is strongly
supported.
Q
99 Dan
Rogerson: So with that proviso, the Bill is slightly less
scary to your members.
David
Frost: Yes, to use that terminology, it is far less
scary, because it gives the business community the ability to become
involved. The worry with the other programmes that I have mentioned is
that they would be seen as an imposition.
Q
100 Dan
Rogerson: Is there a feeling that local authorities would
automatically look at the list of all the potential powers and use all
of them to get as much money as possible out of the business community?
Do you think that it is more likely that through consultation with the
business community—and a ballot is integral—there would
be a local decision on which model would be best for that area and that
that is a better way to
proceed? David
Frost: I would like to think that that will be the
case. My concern is that over the next few years, as funding for local
authorities becomes tighter, they will seek every additional way to
raise money locally. The other concern is that there will be
substitution—in other words, the funds for existing economic
development activities will be transferred to fund social services, for
example, and the business community will be asked to fund work that is
already being carried out.
Q
101 Mr.
Khan: My questions arise from those put by Mr.
Raynsford and from your answers towards the end. There is the principle
of the business rate supplements and their detail. To be clear, you are
in favour of the principle of BRS, but have problems with the
detail. David
Frost: We do not oppose the principle of raising
additional funds from the business community at a local level. As I
said at the beginning, we think that some of the increases would do
that.
Q
102 Mr.
Khan: That is excellent. It is a change from the written
submission, so good. My second question concerns your being in favour
of the principle of the BRS. I am not clear about your position. Are
you in favour of the principle of BRS for London and the rest of the
country, or just in favour of the principle of BRS for London and not
the rest of the
country? David
Frost: No, we think that the concept of raising
additional funds from the UK business community is one that should be
explored.
Q
103 Mr.
Khan: So you would not be in favour of a London-only
Bill.
David
Frost: No. Our concern is that the flip side is that
the BRS was introduced specifically to deal with the issue of
Crossrail.
Q
104 Mr.
Khan: That leads me to my final question. You are in
favour of the principle of the business rate supplement. Is that the
case? You mentioned
Crossrail. David
Frost: No, we are in favour of the principle of
allowing moneys to be raised from local communities, including the
business
community.
Q
105 Mr.
Khan: Are you in favour of the business rate supplement
being used to make Crossrail a
reality? David
Frost: I think that we have to
be.
Q
106 Mr.
Khan: So you are. I will not go into verbal gymnastics. I
have a simple question. You are in favour of BRS in London for
Crossrail. We have established that. Does your concern about the detail
act as a veto to London getting the funding via the business rate
supplement or do you accept, even with its imperfections in your view,
that it is worth having and so that Crossrail can
succeed? David
Frost: I think that Crossrail is too far down the
track. It is not an ideal way in which to fund a national project,
because Crossrail is not such a
project.
Mr.
Khan: With its imperfections, it is fine. I like the pun.
Thank
you.
Q
107 Mr.
Field: I am a former business man. I had a business that
was based in the City, so I understand your critique or concern that,
as a whole, the Government often regard business as a cash cow. I would
have used that critique myself when I was on the other side of the
fence, before I joined the public sector. Do you not appreciate that
there is disbursement on different initiatives, whether BIDs, the whole
BRS thing or the accelerated development service, partly because of the
level of hostility, so we need small parcels with identifiable, quite
distinct benefits for business, otherwise business just thinks that it
is all more and more Government on its back. If business can see that
there are distinct benefits—there are quite different benefits,
as we saw in our discussion about BIDs, for example—do you not
accept that that concern is in the mind of any Government who are
trying to raise money for large infrastructure projects.
David
Frost: No, I just think that there is a lack of
coherence. I do not think that a debate is taking place about how much
money should be raised at a local level and how that can best be done.
There appear to be a range of different “innovative”
schemes to raise money at a local level, without any thought being
given as to how they dovetail together—if at all. That is what
creates the worries in the business community. It signs up for one
business improvement district, which for the reasons I have given has
strong supporters, and then finds all of a sudden that the local
authority wants to run with workplace parking charging and the BRS,
whatever we have gone
into.
Q
108 Mr.
Field: But as I understand it, one of your objectives is
the transparency of the initiatives. The idea of value capture goes
back a long time. It is quite an historical idea, and an element of it
in a London context goes back to the Jubilee line extension, when there
were huge benefits to the community at large, but
specific large benefits to landowners that almost came as windfall
gains. There is an element whereby matters of Crossrail and elsewhere
have been trying as far as possible to balance out the issues. I
appreciate that this is difficult: if we had had this discussion a
couple of years ago, you might have found it easier going than now,
with the travails and tumultuous economic events of the past year and
the difficulties ahead. However, can you understand that there often
have been huge windfall gains for property owners, particularly in
large infrastructure projects, where they happen to own property
nearby, which seems to be at odds with some of the benefits that need
to be spread more widely across communities in such
projects? David
Frost: I would also say that there will be much
greater and wider economic benefits to the area, in job creation and
regeneration of communities. I do not think that it should be simply
seen as a particular landowner getting a windfall. However, we are in a
very different economic climate
now.
Q
109 Mr.
Field: I do not entirely agree with what Ministers are
saying specifically about Crossrail. My party has some concerns with
elements of the legislation. I possibly have slightly fewer concerns
about the principles of the measure than one or two other members of my
party. However, regarding the benefits of Crossrail, the Bill will
raise only £3.25 billion for a project whose cost of is
currently envisaged to be between £16 billion and £17
billion. That is a relatively small figure; it is less than a fifth of
the overall cost. Do you not think that within the context of those
overall benefits, which will be seen, too, by many generations of
businesses, to pay about a fifth of that cost is in the ball park of
equitability? David
Frost: As I say, I can see that, but what I want to
see when we have taken the London issue out is much greater
transparency, as you say, and much greater openness to the involvement
of the business community. It is not my role, nor should it be, to say
that business communities the length and breadth of this country should
not have the power to look at how to get new developments, particularly
new forms of regeneration in their communities over the coming years.
However, it is my role to reflect some of the very real concerns about
how we will ensure the survival of good projects such as the business
improvement district. Equally, we are not going to allow the business
community to be seen just as a cash cow and have the relentless
layering of one project after
another.
Q
110Paul
Farrelly: Given the initial approach of your submission,
which is really to heap one possible charge on another, on another, on
another, with the implication that to your members the business rate
supplement is either the thin or the thick end of the wedge, I am not
surprised that lots of your members may have come back to chambers of
commerce around the country and said, “We do not want it, and if
London wants it let it get on with it on its own”. Of course, as
Mr. Raynsford skilfully probed, Crossrail is unique by
definition, because it is unique to London, but it is not unique as a
major transport or infrastructure project that might benefit different
parts of the
country. I
will not speak for Greater Manchester, Warrington or Wigan or even as
far as Runcorn, but in north Staffordshire for example, where there is
a very active chamber of commerce, some of our transport links are
the worst in the country. If you can get into the centre of Stoke, you
will find that it is very difficult to get out. My constituency,
Newcastle-under-Lyme, has the distinction of being, post-Beeching, the
largest town in Britain without any form of railway. If a scheme in
north Staffordshire were to be constructed on the table, with different
innovative sources of finance, as was the case with Crossrail, which
has the support of many London Members, I suspect that the chamber of
commerce, given that it is screaming out for better transport in the
area, might take a different view. I suspect that that might be
replicated around the country. Have you considered
that? David
Frost: Having followed for many years the unravelling
debate about the great separation of the A500 through north
Staffordshire, I fully appreciate the interests of the area. I
come back to the point about what may well happen in the community in
north Staffordshire. I strongly suggest that because of the impact of
the downturn, not least on the ceramics sector, there will be a debate
about how that area is regenerated. It is about much more than building
roads.
The business
community wants an open and transparent debate about, first, what is
needed from a range of options and, secondly, what method will be used
to fund it—and we want a vote on it, which is where the BID
comes in—to get rid of the concern that, after we have paid for
something that will be in place for many years, the local authority
will propose yet another levy to do something else, so that business
communities, during an immensely difficult economic time, will find
that more and more costs are being ramped up on them.
To talk
specifically about transport—a question that is constantly
thrown at me as I go round the country to talk about congestion
charging, workplace parking and whatever—that is why we are
expected to provide more money when we are already paying nearly
£50 billion in road tax. People ask “Why am I expected to
pay more money at a local
level?”
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