Q
248 Mr.
Field: Not directly, at
least. Jerry
Schurder: Of course. If the BRS funds a scheme that
is a benefit to the landlord or to the tenant in its operation and
business, that increases the demand for the property and may well lead
to an increase in its rental value. The tenant pays more rent and the
landlord benefits. The tenant is also benefiting because he can do
better business in the area but he has paid for that and has paid for
it again to the landlord by way of increased rent. As an aside,
increased rental value feeds through to an increased rateable value,
which therefore means he is paying more through business rates as well.
It does seem rather too one-sided. Defeatist, I think, is a bit too
strong. We need to stand back and ask whether there is a better
mechanism for other schemes outside of
Crossrail.
The
Chairman: There are no further questions.
As you have a
little more time before this particular evidence session is over, if
there are any other points that you would like to make to the Committee
please feel free to do so.
Blake
Penfold: There is one point that I would like to
make, which is a practical point. Assuming that this Bill is passed,
the burden of paying the supplement will rest with the
ratepayer—that is, the tenant. It is potentially a substantial
administrative burden as well as a financial one. For example, Home
Retail Group—Argos—would be asked to pay about 120
supplements across the Greater London authority area.
For the
simplicity of the system and for the administrative benefit of
supplement payers, I believe that there would be merit in considering
making all provisions regarding billing, collection and enforcement sit
alongside those ordinary billing, collection and enforcement
regulations on normal non-domestic rates. At the moment, BIDs payers
suffer from a degree of uncertainty about issues such as what happens
when a rateable value changes, what the due dates are and whether
payments are allowed by instalments. If the supplement could default to
the billing, collection and enforcement arrangements applicable to NDR,
that would represent considerable simplicity for taxpayers in budgeting
and in making payments.
The
Chairman: Thank you. Are there any further points from the
Committee on that? No.
Thank you
both for coming along and for your interesting contribution to the
debate about this Bill.
6.8
pm
The
Chairman: I welcome our two representatives from the Local
Government Association and thank them both for coming here. We have
until seven o’clock, in theory, but I rather suspect that there
will be a Division shortly, after 10 minutes to 7, in which case
today’s business will come to a premature end, if Mr.
Watts is quick on his feet.
For the
record, Councillors, could you please introduce yourselves?
Councillor
Knight: My name is Councillor Stephen Knight and I am
the deputy leader of the London borough of Richmond upon
Thames.
Councillor
Ross: I am Keith Ross. I am the leader of the
Independent group at the Local Government Association and I am also the
leader of West Somerset district council.
Councillor
Knight: We are here to represent the cross-party
settled view of the Local Government Association. Hopefully, we speak
with an all-party view from local
government.
Q
249 Dan
Rogerson: A lot has been said about how a more
constructive relationship could be fostered between business and local
government, particularly in terms of economic development but in
general about consulting on the future for a local area and how best to
fund any changes that are necessary. What potential do you think that
this Bill and the business rate supplement have for making some
positive changes?
Councillor
Ross: The LGA has long felt that business rates
generally should be localised and that local authorities should be
responsible for setting business rates locally, to meet local needs,
local aspirations and the requirements of local economies. We would
welcome this Bill as a step in the right direction, although it does
not go far enough to meet our wish of having a much more locally
empowered tier of government that was able to make decisions to reflect
the needs and aspirations of the local economy and the local business
sector.
Q
250 Dan
Rogerson: An issue that I would want to return to is
ballots and how the current wording in the Bill might change during the
Committee stage. The view of the witnesses who represent the business
community seems to be that this is the core of the matter for them.
They want to be reassured that they will have a final say as to whether
a rate should be imposed in their area. What is the
association’s response to that?
Councillor
Knight: Our view is very much that we are a
democratic tier of government. We represent and are accountable to our
communities. The guarantee to local businesses that this power will not
be abused is the guarantee that we are accountable to local
communities. We have a direct interest in ensuring that local economies
are maintained and sustained, that local employment is sustained, that
local high streets are sustained and that we have a vital local
economy. We have key responsibilities and requirements to keep local
economies healthy and sustained. The requirements in different areas
will be very different.
We would say
that local authorities ought to be trusted, given our accountability,
to make such decisions. We do engage with businesses. In my own
authority we
have a business breakfast tomorrow morning. Two hundred business leaders
from my borough are coming together to discuss the local economy and
the issues surrounding the coming recession and what the local
authority can do to work better with businesses to enhance the local
economy. We are very much plugged in to the economy. It is a key part
of the community that we lead and represent. Our democratic legitimacy
gives us the position to do so. Local authorities have demonstrated
that we are very good at representing and leading local
communities. Councillor
Ross: Historically, before business rates, we had a
good relationship with businesses because we used to set the rates with
business and had a full consultation before that rate was set
locally.
Q
251 Dan
Rogerson: I am sure that that was the case, but we have
heard that in some areas things may not have been quite as happy as the
picture you describe. Do you not accept that there might be something
different above and beyond the traditional business rate, if we are
talking about something for a specific project that is an extra
financial cost to business, and that there might be a case for
something above and beyond the usual consultation and
discussion? Councillor
Knight: I think the problem is that many schemes and
projects to promote the wider economy of an area may not have an
immediate bottom-line return to an individual business in that area.
The benefit might be wider. It might be much more long term. In the
case of Crossrail, it may be 20 years before the scheme is up and
running and anybody benefits in terms of their bottom line. But clearly
there is a wider economic benefit to the whole business
community.
The
association’s view is that local government, as the democratic
tier of government tasked with representing and leading communities, is
best placed to engage with businesses and ultimately to make the
decisions about what is in the best interests of local economies. We
would want the flexibility to be able to work with businesses to put
together schemes that would have to have broad business support to go
forward. Like you, we are accountable politicians. If we put forward
proposals that do not have the broad backing of local people, we would
soon find ourselves out of a
job.
Q
252 Mr.
Neil Turner (Wigan) (Lab): It is a long time since the
business vote was abolished. How do you feel about businessmen who have
a vote as citizens having a second vote as a business, and a possible
veto on local government
decisions? Councillor
Ross: I am certainly not in favour of a business vote
as a second vote. That goes beyond the historic situation in this
country, which is one man, one vote, and I think that it should stay
so.
Mr.
Turner: Do I take it from that that you would oppose
businesses having a vote on the business rate
supplement? Councillor
Ross: Full consultation with business is a better way
forward than having a
ballot.
Q
253 Mr.
Turner: A number of the previous witnesses have said that
the measure is about Crossrail. They accept that Crossrail is unique to
London and it should not be replicated in other parts of the country.
However,
coming from Greater Manchester, I can see a situation in which we might
want to extend the Manchester metro to the Trafford centre, which would
clearly benefit businesses, but would not specifically benefit my
constituents in Wigan. Do you think that the argument does not stand up
to that kind of situation and that businesses should contribute to that
specific extension of
Metrolink? Councillor
Ross: If it will encourage more business, it will
probably be of interest to your constituents as well, if they have
easier access to businesses in downtown Manchester, for
instance.
Q
254 Mr.
Turner: I should explain that the Trafford centre is a
huge out-of-town shopping centre and it generates huge amounts of
traffic on the M60—Manchester’s equivalent of the
M25—so having an extension of the Metrolink from Manchester to
there would benefit the citizens of Wigan to a small degree, but it
would be much more beneficial to the people who are in the Trafford
centre itself. All I am asking is: do you think that in those
circumstances, people in the businesses there should contribute to that
scheme because they are going to get more benefit than the citizens of
Wigan, who would otherwise have to partially fund the extension, as
ratepayers through the Greater Manchester passenger transport
executive.
Councillor
Knight: We could give a view on that, but the broader
view that we want to present to you is that this would be a
decision—
Mr.
Turner: I am using that as an
example. Councillor
Knight: Indeed, but it is the sort of decision that
we would like to see taken locally, because it is the local authorities
in that area that would be best placed to make a decision on whether
such a scheme would have a wider economic benefit for their authority
area. We could offer a view on whether it was good thing or not, as
could everyone around the table, but the authority is the group of
people who are elected to represent that area, and they are the people
with the best knowledge of their local communities and so on. You could
take a similar view on Crossrail: there are parts of London that will
benefit far more than others from
Crossrail.
Q
255 Mr.
Turner: The point I am trying to get to is that previous
witnesses were saying that the process should not be extended to other
parts of the country. The case of the Metrolink and the Trafford centre
is an example of where a particular part of Greater Manchester could
benefit, and the scheme either gets funded by all the citizens, as
council tax payers, or part of it gets funded by those who are going to
benefit from it. Is it your view that that second part is
right—that the Bill should go through and that the ability to
have a supplementary rate should be throughout the country, rather than
being limited to
London? Councillor
Ross: You are making the case that Wigan is, I
presume, apart from the Trafford centre and not many people in Wigan
would use the Trafford Centre. I have a similar view regarding the
county in which I live. If the county council, as the authority that
was going to benefit from the business rate, was going to charge that
supplementary to every business in the county, there are many
businesses in the county that would not benefit and a lot of the
citizens would not benefit. I think that,
certainly in two-tier areas, precepting authority should be, not the
county council, but the district council, and that any such scheme
should be centred on a district that worked with a neighbouring
district—even one in another county if necessary—to
develop a scheme that benefited the community.
Councillor
Knight: In the current economic climate, it is clear
that all local authorities are looking very hard at how they can help
their business communities to survive the recession. We are all looking
at potential economic development schemes and so on that could help to
promote and develop our communities and economies locally. A new and
additional source of funding that will help to deliver new and
additional things that will help the local economy would therefore be
welcomed by authorities across the country, not only in London.
Everybody has economic needs, and economic development is an issue on
which local authorities want, and are well placed, to intervene
successfully. We hope that the Bill will go some way to providing extra
powers to enable authorities to do
that.
Q
256 Mr.
Field: Many of us here would instinctively support the
element of localisation to which you referred—I was a councillor
before becoming a Member of Parliament—but the reality of the
situation and the dire straits of the public finances mean that there
is no question that there will be a great expansion in localisation.
Understandably, central Government, of whichever party, will want to
try hang on to control of the public finances and not go down the route
of, say, policy 30 years
ago. Also,
I should say that one area in my constituency still has a business
vote. For historical reasons, the City of London retains a business
vote with only 8,000 local
residents. Councillor
Knight: And, indeed, a form of supplementary business
rate.
Q
257 Mr.
Field: As I have already pointed out, it does have a form
of supplementary business rate. That is the quid pro quo of maintaining
the business vote, and the small residential population gets looked
after quite well.
Perhaps one
difficulty from the London perspective for you, Councillor Knight, is
that a significant number of the people who live in Richmond do not
work there, and a significant number who work there do not live there.
That could be a London and outskirts-of-London phenomenon—the
situation may not be the same in west Somerset. How will you
realistically make the case for what is an increasingly disparate tax
base, considering the legislation and BIDs—I suspect that they
do not appear in Richmond, but you will have come across the
concept—to a residential population to whom you are actually
accountable, beyond the business population, to whom you might like to
have a certain level of accountability but which, realistically, you do
not have at this
juncture. Councillor
Knight: I think what you are really asking is the
extent to which the local residential population has an interest in the
business activity of the area. The population have an interest, because
many of them are employed locally. Even when a number of people are
employed in London boroughs where they do not live,
as you said, a lot of the businesses will be in high streets, and the
vitality of shopping centres is part of a local
community. In
my own borough, we recently had an announcement that the Stag brewery
in Mortlake, which I believe is the oldest working brewery anywhere in
the UK—it has been in existence for 600 years—is about to
close its doors. That has a huge impact on the local community, not
only in terms of local jobs, but in terms of the environment, because
we have to ask what will happen on such a major site, where there might
a planning application for new housing and so on. There is a huge
interest for the local community. If people see jobs going locally,
they know that their job is not that far away. They will expect
businesses to be supported.
In a sense, a
community goes into decline when its economy goes into decline, and
nobody wants to live in a declining community. Boroughs can be
relatively small, and people can cross borough boundaries, but London
works fairly collectively. In the case of the business rate supplement,
the boroughs will merely have the role of collecting the wider
supplement on behalf of the Mayor and the Crossrail scheme, which will
use most of the money.
Our argument
earlier in the process was that boroughs ought to have more of a role
in a London business rate supplement and perhaps share some of the
proceeds for more localised business benefit, so that every part of
London could see some benefit from the supplement. Clearly, we all
support Crossrail and want to see it succeed, but it is difficult to
sell the benefits of Crossrail in areas of London that are far away
from it. Crossrail does not go directly through my borough and we do
not see a direct benefit for local businesses; that is even starker in
places such as Croydon and
Bromley.
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