Q
327Mr.
Dunne: I am pleased to hear that. I was present when you
made that announcement, which is
encouraging. My third
question relates to the interaction between the BRS and BIDs. The Bill
makes provision for voluntary offset on a case-by-case basis. Will you
clarify why you think that should be voluntary and not
mandatory? Mr.
Khan: Mark gave some very good examples on Tuesday of
how one could envisage local authorities around London—I will
put this as generously as I can—deciding to come up with BIDs as
a way of not having to contribute towards the BRS. There is clearly an
question of mischief there, but it is also a way of not having funds
diverted to the BRS, which is the Mayor’s plan. The Mayor has
told us quite forcefully that if he is going to guarantee the loans
that he wants via the BRS, he cannot have an opt-out for those
businesses that are involved in BIDs.
The
third point to make is that BRS would apply only to those businesses
with a rateable value over £50,000. The vast majority of
businesses involved with BIDs tend to be the smaller businesses which
can see the benefits immediately on their doorstep and on their street.
We hope that the overlap will be minimal, but also we are alive to the
fact that the Mayor has a serious point about being able to guarantee
moneys coming in each year via BRS.
John
Healey: That is correct. I think in the end that they
are different. BIDs and BRS bring different benefits; they serve
different purposes; they raise different types of funding; and they
last over different terms. That is the view we have taken. It is the
view that we heard from the CBI and from British BIDs. It was
acknowledged by the Royal Institution of Chartered Surveyors and it is
the view the Mayor takes, too. BIDs and BRS are
different.
Q
328Mr.
Dunne: I note that the annexe to the impact assessment
states: “BRS
could be used to fund smaller, less expensive initiatives, such as
promoting an area to tourists, or for investment, or using the
supplement to provide skills
training.” Those
are very much the sort of things that BIDs are currently used
for. John
Healey: I am not aware of BIDs being used for skills
training. The examples you quote from the associated documentation to
the Bill are simply illustrative of areas in which there may be
projects or investments related to economic development that could
therefore fall within the permissible parameters of the Bill for a
contribution from BRS. It would be for the local authority to make the
case for that type of investment if they wanted to base it on some form
of funding from a business rates
supplement.
Q
329Mr.
Dunne: I know that we are running out of time, so this is
my final question. The impact assessment—which I must say is a
very thin document—estimates that the types of businesses that
will be most affected by the Bill are those with high rateable values
such as retail businesses. We heard evidence from the British Retail
Consortium on Tuesday. With a 2p levying rate, the impact will be an
increase of around 5 per cent. in business rates. What assessment has
been done by your Department into the proportion of net margins and
retailers that would be absorbed by such an increase?
John
Healey: The preparatory analysis and assessment that
we have done is consolidated and published in the impact assessment. I
found the evidence from the British Retail Consortium less convincing
and persuasive than that given by some of our other witnesses on
Tuesday. It is not necessarily the case that retail is somehow likely
to bear the greater part of the burden of any BRS. In the argument
about BIDs versus BRS, it is the case that many of those making a
contribution in BIDs areas will fall well below the proposed
£50,000 threshold and will not be eligible to pay a business
rates supplement if it is introduced.
Q
330Mr.
Dunne: Well, your own impact assessment acknowledges that
retail premises are likely to be disproportionately affected by the
BRS—I have a quote from it. You admit that retail will be
disproportionately affected, and you have just contradicted
yourself.
John
Healey: If you look at the analysis regarding
premises that tend to be rated over the £50,000 threshold, large
retail outlets do figure. However, businesses that tend to be in that
bracket sit alongside other employers and businesses from other
sectors. Although they are big in numerical terms, they make up a
minority of even those in the retail sector. We tried as a Committee to
get something on that from the British Retail Consortium on Tuesday,
but were not able to very clearly.
Q
331Mr.
Dunne: Minister, do you know what the typical net margins
of retail businesses are in good times, let alone poor times?
John
Healey: I have no background in retail
directly. The short answer to that is no—it is not something
that I have taken a specialist interest in.
Q
332Mr.
Dunne: And when preparing the Bill, you did not think to
ask your officials what the impact would be on the net margins of the
different categories of businesses that might end up paying
this?
John
Healey: Mr. Dunne, the Bill sets out a
framework in which local areas, led by local authorities, can consider
whether they want to see long-term investment projects in their area,
of which BRS may form a part. If they do, that sort of assessment and
analysis, both of the benefits that it could bring to their area and
the potential impact on business, will make up part of what they pull
together for their case. It will be confirmed in the prospectus and
then formally consulted on. Surely you would accept that such work
should properly be done area by area as part of the consideration and
consultation before any proposition goes ahead? Any aggregate analysis
that could be done at a national level at this time is probably not a
good indication—
Q
333Mr.
Dunne: I am sorry to interrupt, but we are about to
finish. When introducing legislation, you as the Minister responsible
are obliged to undertake an impact assessment. The work that has been
done on page 13 of your assessment is one of the thinnest and weakest
pieces of work that I have seen in an impact assessment for a Bill on
which I have served.
Q
334Mr.
Binley: On a point of order, Mrs. Dean, you
will note that we are clearly not going to get on to the area of
consultations, ballots, exemptions and reliefs. I wonder if you could
just take that into account when it comes to the debate itself. I would
be most grateful.
The
Chairman: I think that we have touched on that subject,
but I am sure that both myself and the other Chairman will take that
point into account.
Mr.
Binley: You are very kind. Thank you.
Ordered,
That further consideration be now
adjourned. —(Mr.
Watts.) 10.25
am Adjourned
till Tuesday 27 January at half past Ten
o’clock.
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