Q
280 Mr.
Raynsford: But I have to tell you from my experience of
the balance of funding review some years ago—Sir Michael Lyons
would repeat this, based on the experience of his inquiry—that
when the whole question
of relocalisation of the business rate came up, the reaction of business
was just as strong and hostile as we are hearing
now. Councillor
Ross: What I am saying is that the first consultation
should be on the scheme, not just the funding of it. If businesses were
to look at the scheme rather than what is proposed in the Bill, which
is the supplementary rate, you might get a different
answer.
Q
281 Mr.
Raynsford: I was going to come on to what I think may be
an area of optimism. It is slightly unfair to ask this question, as
both of you said that you do not have much experience of it, but BIDs
are an area where there has been surprising progress. There was a great
deal of scepticism at the outset. Not many of those who now say that
they are in favour of BIDs were saying that when we introduced the
scheme in the 2003 legislation, but there is now growing support for
it. It
seems to me that the way forward—I ask you to comment and think
about this—is probably to try to build on that practical
experience, which certainly chimes with Councillor Ross’s view
that we should focus on the merits of individual schemes for delivering
benefits, rather than the theoretical taxation
system. Councillor
Knight: That is right. There seems to be wide support
for Crossrail, in part because we know what we are paying for. You are,
in a sense, debating a tax-raising power in the abstract, without
knowing what it will pay for. It becomes quite difficult then. As soon
as you say, “Is it right to raise extra business rates to pay
for this scheme in this area that will deliver this benefit?”
and everybody can see the benefit, you can start to have that debate
and the business community can be involved and so on. However, that
sort of debate can only happen locally once the local authority has
developed a scheme and put it out to consultation with the business
community.
Q
282 Mr.
Raynsford: I should not put this question, because I said
that the previous one was my last, but you have provoked it. Do you not
think that it is a shame that there are not schemes that you can wheel
out? You said that there were not any schemes, apart from Crossrail,
that local government is currently preparing. Should there not be some
practical projects being worked up by local government in conjunction
with local
business? Councillor
Ross: There are some ideas. There is an idea in
Sheffield about a development there, but apparently the supplementary
business rate would not apply to that scheme because it goes beyond
infrastructure or involves housing, and I think housing is excluded
under the
Bill.
Mr.
Raynsford: It is excluded,
yes.
Q
283Paul
Farrelly: Not representing a London constituency, I had
not looked terribly hard, until these Committee proceedings, at
Crossrail’s finances. We will find out on Thursday when we ask
the Minister, but I do not know where the £50,000 threshold has
come from. I imagine that it has been arrived at to make the Crossrail
sums add up. How do you feel about the £50,000 threshold, given
that at that level, although there is discretion to amend it, you might
be able locally as collecting agents to say, “Not us, guv.
That’s the Government’s recommendation”? If you
had other schemes
around the country, how do you think local councils, having been
collectors of business rates, would be able to deal with the changed
relationship with business that might occur if certain groups lobbied
you with special pleading that meant that they got off and that it
landed on other businesses or retailers in the town? How do you think
that it might alter the relationship with
business? Councillor
Ross: It is probably not just in relation to large
business that the limit that you give of £50,000 is too high. I
checked with our tax department this morning and, interestingly, a
significant number of the businesses that have a rateable value of more
than £50,000 are hospitals, schools and public buildings, so you
will be taxing facilities that should not be taxed, such as schools and
hospitals. I wondered why you had not even thought about putting an
exemption for public buildings in the Bill. Lowering the level would
counteract that tax
take.
Paul
Farrelly: That is an excellent question for the Minister,
along with questions about ports and sports clubs, on
Thursday.
Q
284 Mr.
Love: I was rather taken aback by how strong an objection
you had to holding a ballot, and I wanted to put this circumstance to
you. Business men have a vote as individuals, but they often live in
another area rather than the relevant local authority area, so they
cannot exercise their democratic rights effectively on behalf of their
business. Where business makes a major contribution towards the
infrastructure project, is it not appropriate that it should have some
real say in whether it goes
ahead? Councillor
Ross: Businesses can have a real say through the
consultation process. I do not believe that it needs a ballot to force
them to
vote.
Q
285 Mr.
Love: That is what you said earlier, but let me press you
on it, because we heard earlier in evidence that in terms of business
improvement districts, it is becoming clear that the fact that a ballot
is mandatory means that all the parties take much more seriously the
exercise that they must go through to build consensus so that the BID
can go ahead. The fear expressed to us by all the business
organisations was that if there were no ballot in any circumstance,
consultation would be perfunctory: “Nice to see you, thanks very
much, here’s the scheme; go away and pay up.” Do you not
think that there is some merit and some reality to
that? Councillor
Knight: Our experience of dealing with any
controversial issue is very much that when you consult on something
controversial, people who have strongly held views will make them very
clearly known at a local level. It is inconceivable that local
authorities would make a decision on something as significant as a
business rate supplement without knowing the views of the major
businesses in their area, or indeed of any other important businesses
in their area. No authority will make a decision that has a detrimental
effect on its local business community. That is an integral part of the
community and its viability and
sustainability.
Q
286 Mr.
Love: I understand that. Local government is often
characterised—indeed, it was characterised to us
earlier—as inviting people in and saying, “How can we get
more money for this project?” I accept what you
are saying—that if real hostility came through on a consultation,
you would be unlikely to proceed with the scheme—but what I am
talking about is building trust and confidence in the business
community, which I must tell you has not been expressed this afternoon.
One way to do that is to give reassurance. We are not suggesting that
that should be done in every single instance; we are only suggesting it
where a major contribution is being made. In other words, where the
business community could easily feel that it is being used as a milch
cow to fund a project, it ought to have some veto available. Is there
not merit in that
proposal? Councillor
Knight: We live in a representative democracy. We
generally do not have ballots and referendums on major projects. There
is a lot of international experience of that sort of thing happening,
locally and nationally, on a regular basis, but it is not part of the
British tradition. It does not happen at a national level, and we do
not see the need for it to happen on the same basis at a local
level.
In many ways,
we feel that because we are local, we are far more accountable for the
decisions that we take than national Government are for their
decisions. We are much more directly accountable to our local
communities. It would be inconceivable—impossible—for a
local authority to proceed with this kind of proposal without the broad
backing of its local business community.
Councillor
Ross: Two pence in the pound is small beer when it
comes to the business rate, is it not? Should big business be too
worried about paying an extra 2p in the pound? It will have to pay more
than that anyway, with a 5 per cent. increase coming up this
year.
Q
287 Mr.
Love: I am not here to answer for the business community,
for a start. It is interesting that you should say that, because we
have heard this afternoon that one of the areas where business
improvement districts have worked effectively and managed to get
support is Dublin. On other ballots, of course, the Irish have proved
somewhat difficult. You can always find an occasion when things will
work in your favour.
The essence
of the matter is that, although I accept that representative democracy
should mean in theory that we all go to ballot in national and local
elections, and that is how we choose who will take us forward, we are
talking about trying to build consensus at local level. It certainly
appears from the evidence, the comments of others and the extremity of
the views expressed to us on both sides that perhaps a ballot is one
way for us to reassure and build the trust that will allow sensible
schemes to go ahead, but only in circumstances where a significant
proportion of funding comes from the business community. However, I
understand your
view. Councillor
Knight: I think, too, that there is a general
democratic view about how decisions are taken, apart from in the City
of London, which is a very particular case. We generally take the view
in this country that democracy is based on one citizen or one person,
one vote, and not on businesses having a vote on decisions affecting
the
community. Councillor
Ross: If you are going to ask businesses to vote,
again talking about shire counties—a bigger area for businesses
to cover—you will probably find that most businesses would not
support any scheme, because it would not touch them. For instance, my
home-ish town is 18 miles away from Frome. The towns have
nothing in common, apart from their both being in Somerset. Wincanton is
closer to Andover than it is to where I live. So should you include
three other counties in a development around Wincanton Transport when
it goes bust and that site needs to be
redeveloped?
The
Chairman: Thank you. If Members have no further questions
for this panel, that brings us to the
end of our business for today. The Committee will sit again at 9
o’clock on Thursday, but this time in the Boothroyd
room. Ordered,
That further consideration be now
adjourned.— (Mr.
Watts.) 6.51
pm Adjourned
till Thursday 22 January at Nine
o’clock.
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