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Session 2008 - 09
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General Committee Debates
Business Rate Supplements

Business Rate Supplements Bill



The Committee consisted of the following Members:

Chairmen: Mr. Peter Atkinson, Mrs. Janet Dean
Binley, Mr. Brian (Northampton, South) (Con)
Burt, Lorely (Solihull) (LD)
Dunne, Mr. Philip (Ludlow) (Con)
Farrelly, Paul (Newcastle-under-Lyme) (Lab)
Field, Mr. Mark (Cities of London and Westminster) (Con)
Healey, John (Minister for Local Government)
Khan, Mr. Sadiq (Parliamentary Under-Secretary of State for Communities and Local Government)
Love, Mr. Andrew (Edmonton) (Lab/Co-op)
Neill, Robert (Bromley and Chislehurst) (Con)
Raynsford, Mr. Nick (Greenwich and Woolwich) (Lab)
Rogerson, Dan (North Cornwall) (LD)
Scott, Mr. Lee (Ilford, North) (Con)
Sharma, Mr. Virendra (Ealing, Southall) (Lab)
Turner, Mr. Neil (Wigan) (Lab)
Twigg, Derek (Halton) (Lab)
Watts, Mr. Dave (Lord Commissioner of Her Majesty's Treasury)
Alan Sandall, Gosia McBride, Committee Clerks
† attended the Committee

Public Bill Committee

Tuesday 27 January 2009

(Morning)

[Mr. Peter Atkinson in the Chair]

Business Rate Supplements Bill

Written evidence to be reported to the House
BRS 05 City of London Corporation
10.30 am
The Chairman: After our evidence sessions of last week, we now move to more familiar territory.
Mr. Mark Field (Cities of London and Westminster) (Con): On a point of order, Mr. Atkinson. I appreciate that the nature of the Bill means that there is no formal programme motion debate, and I seek your guidance on how we might address a particular issue. As you are aware, the Bill has had some high-profile attention as a result of news stories in the press. Will I be able to ask the Minister for Local Government whether he has been approached by Members of the other place about the matters before us?
The Chairman: Order. I must stop the hon. Gentleman. The Programming Sub-Committee has set a timetable for this Committee. The matter that he raises has absolutely nothing to do with the contents of the Bill.
Mr. Field: Further to that point of order, Mr. Atkinson. I do not wish to criticise the Chair or answer back, but my point is relevant. The Government—like any Government—are well aware that they can get their business through the Commons without any great difficulty. Therefore, we go through the whole process that we have seen in the Commons. The concern is that in the Lords, where there is no majority—at least as the Lords is currently constituted—amendments can be tabled that have a lot more sway than is, perhaps, the case here. That is the reason why I wish to put the issue on the record.
The Chairman: Order. It is clear that nothing in the Bill is relevant to what the hon. Gentleman is saying. As to what happens in another place, that is up to another place, and is equally irrelevant. I appreciate what he is trying to do, but it is not in order.

Clause 1

Power to impose a BRS
Dan Rogerson (North Cornwall) (LD): I beg to move amendment 1, in clause 1, page 1, line 7, leave out ‘is’ and insert
‘and the majority of the affected business community are’.
The Chairman: With this it will be convenient to discuss the following: amendment 25, in clause 4, page 3, line 21, leave out from beginning to second ‘ballot’ and insert ‘a’.
Amendment 5, in clause 4, page 3, line 21, leave out—
‘where there is to be’.
Amendment 6, in clause 4, page 3, line 21, leave out ‘, the ballot’.
Amendment 7, in clause 4, page 3, line 24, at end insert—
‘(2) Subsection (1)(c) does not apply in relation to Crossrail.’.
Amendment 36, in schedule 1, page 22, line 36, leave out sub-paragraphs (a) and (b) and insert—
‘the arrangements for the ballot’.
Amendment 37, in schedule 1, page 22, line 39, leave out sub-paragraphs (a) and (b) and insert—
‘the result of the ballot’.
Amendment 10, in clause 7, page 4, line 32, leave out from ‘BRS’ to end of line 42.
Amendment 11, in clause 7, page 5, line 8, at end insert—
‘(6) This section does not apply to Crossrail.’.
Amendment 27, in clause 7, page 5, line 8, at end add—
‘(6) This section does not apply to the Crossrail project promoted by the Greater London Authority.’.
Amendment 12, in clause 8, page 5, line 10, leave out—
‘If a ballot on the imposition of a BRS is held,’.
Amendment 28, in clause 10, page 6, line 12, leave out from beginning to second ‘a’ in line 13.
Amendment 29, in clause 10, page 6, line 46, leave out from ‘BRS’ to end of line 13 on page 7.
Dan Rogerson: I take this opportunity to formally welcome you to the Chair, Mr. Atkinson, and to thank you for the excellent way in which you conducted our evidence sessions. I am sure that you will agree that they were very useful, as well as informative and helpful to us. That leads us nicely to the matters that we will be discussing this morning and in future sittings.
Amendment 1, which is in my name and that of my hon. Friend the Member for Solihull, goes to the heart of the business community’s concerns about the Bill. As we heard in the evidence sessions, there are grave concerns about the ability of businesses to influence the decision on whether a supplement is enacted in their area. The Minister of State has been keen to point out that the consultation is a key part of the Bill, and that is welcome, but as we heard time and again, there are concerns that that does not go far enough. A ballot would be the ultimate reassurance to the business community that the extra contribution that it is asked to make will be put to what it believes is a good use.
The amendment would include the business community in deciding what is of recognised benefit and interest to an area by making sure that the majority of that community is satisfied that the projects funded by the supplement will promote economic development. As it stands, only the levying authorities need to be satisfied of that. It is important to make it clear in the Bill that, since the supplement will be a key contribution by businesses, they have a role in the consensus on moving forward.
Amendments 5 to 7 refer specifically to ballots, and insert the need for a ballot in all cases. As we went through our evidence sessions, one issue emerged time and again: while the business community had concerns about the timing of the Bill, they were prepared to accept that, where important projects were being taken forward in the local area, business should make its contribution. We heard that this form of property tax was perhaps not ideal and that there were issues regarding owners of property—as opposed to tenants—and how they could make a contribution. The fundamental concern was that the business community should have the right, through a ballot, to sign up to, or reject, any proposal.
When the British Retail Consortium was asked about a ballot, Jane Milne said:
“It is, as far as we are concerned, the single most crucial step as to strengthen the safeguards. There are already safeguards within the Bill, but we do not feel that they go far enough.”——[Official Report, Business Rate Supplements Public Bill Committee, 20 January 2009; c. 19, Q82.]
We also heard from the British Chambers of Commerce. Mr. Frost was asked whether it would be more reassuring to include a ballot. He said:
“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.”——[Official Report, Business Rate Supplement Public Bill Committee, 20 January 2009; c. 24, Q99.]
Dr. Grail, representing British BIDs, expressed concern that where a proposal for a business improvement district was being developed, if there were no ballots on a business rate supplement in the same area, businesses might feel that the only chance they had to prevent being overburdened by additional taxation would be to reject the BID. There were concerns that the lack of a ballot on a business rate supplement might influence how people would vote on a BID in the same area.
From our earlier sessions we heard that many Members, of all parties, felt that the BID process has been constructive and useful, and has achieved a great deal in areas where it has been enacted. Conflict between a BID process and a business rate supplement, if there were to be no ballot for a BRS, could be a crucial issue.
My hon. Friend the Member for Solihull and I were also keen to show through our amendments that we feel that Crossrail is a different case, so it was interesting to hear the evidence from the Confederation of British Industry—it feels that Crossrail is separate, as well. Karen Dee said:
“Businesses will vote for something if they see that it is of benefit to them.”——[Official Report, Business Rate Supplements Public Bill Committee, 20 January 2009; c. 39, Q163.]
We discussed the issue then and the feeling was that Crossrail is different: the process has gone on for a very long time and there has been a great deal of debate; and there has been a Bill through Parliament allowing us to look at the issues very closely. For that reason, we concluded that the provision for a ballot in all cases should not apply to Crossrail.
I am sure that the Minister will want to reply to that and say that we should either have a ballot in all cases or in none, but it is clear to Opposition Members that Crossrail is a unique project. Given its scale, scope and national importance, and the clear expressions of will and involvement by all parties throughout, it should be treated separately. That is why our amendments would provide for a ballot in all cases other than Crossrail, including all new projects.
The key issue is to take the business community forward with us. The Local Government Association felt very strongly that it would be able to do so through debate and consultation with the local business community. I hope that that would be the case in many projects and that a ballot would deliver a yes vote, or would not even be approached, as there was already that consensus and the feeling that everybody was moving forward together. However, there still seems to be a concern in the business community that, without the ability to call for a ballot to focus everybody’s mind and ensure that the process is as constructive and inclusive as possible, the consultation might not prove as effective. So I am certainly very happy to commend the amendment to the Committee. From our point of view, the significant amendments in the group are 5 and 6, which would make a ballot compulsory, no matter what the size of the contribution being made by the BRS to the project.
Mr. Field: Will the hon. Gentleman indicate who would qualify for such a ballot? I do not wish to do the Government’s arguing for them, but it seems that this is a rather complicated situation. Would the qualification be on the basis of being a leaseholder at a particular time, a freeholder or an owner of property, or of having a particular interest? As he will know, in relation to the existing business vote in the City of London, in my constituency, it is only relatively recently that the qualification has gone beyond simply those in partnership and sole practitioners of businesses to a corporate vote with a complicated structure. How does he envisage the ballot and the qualification for it working?
Dan Rogerson: We are not seeking to change the conditions in the Bill about who would qualify for a ballot, and when we come on to talk about thresholds, we will discuss those on whom the rate will be imposed. The issue is that the Bill defines a set of circumstances that would trigger a ballot, which is when a certain percentage—30 per cent. or so—or more of the total scheme budget is to be funded by the BRS. Below that proportion, it will not be necessary to hold a ballot. Given the evidence that we heard and the written submissions that we had from the business community, there is a great deal of concern that the provision does not go far enough and there should be a ballot in all circumstances, and that is what my amendment seeks to introduce.
I will therefore be interested to hear the Minister’s response. I suspect that I can anticipate some of the arguments because we rehearsed them a little during the exchanges—I hesitate to call them debates—in our evidence sessions. I will obviously wait to hear what the Minister has to say, but I hope he will feel that the evidence that we heard in our earlier sittings is convincing enough to move to having a ballot in all circumstances. If I am not entirely satisfied, I may well seek to press some of the amendments to a vote.
Robert Neill (Bromley and Chislehurst) (Con): Welcome back to the Chair, Mr. Atkinson. I am delighted to see that it is as sunny in London as it was in the north-east of England when I was there yesterday.
I have much sympathy with the amendment moved by the hon. Member for North Cornwall. In broad terms, my colleagues and I are minded to support it but we have tabled our own amendments. They are grouped here in a different formulation but they would achieve essentially the same objective. I shall speak to those as well as to the hon. Gentleman’s amendment.
The hon. Gentleman is right to say that the amendment concerns two of the Bill’s key issues. Principally, there is the question of whether there should be a compulsory ballot in all cases. My hon. Friends and I adopt the stance that to meet the Government’s objectives of ensuring that the BRS system has credibility in the business community, a ballot is essential in all cases. The threshold that the Government propose—that a ballot should be required only when the BRS will raise more than one third of the total cost of the scheme—seems to us, with respect, a somewhat arbitrary figure. One can think of schemes, particularly some of the joint schemes, that are proposed for transport infrastructure where a quarter or a fifth of the total cost would be a very large sum. In the evidence sessions, Government Members talked about transport schemes for bridges and tramways—that is substantial capital investment—and a quarter or a fifth of the cost would be a very substantial burden to place on businesses.
10.45 am
It may be, if the case is convincingly made, that businesses will consider it a worthwhile investment, and I do not have an objection to that. That is why my hon. Friends and I have always supported the concept of the business improvement district and would be happy to see it implemented further. The key test, however, is that businesses can buy in.
We are particularly concerned in the present economic climate about the potential imposition of large levies without a ballot. We are worried that, without a ballot, there will not be the necessary discipline on local authorities that choose to take up a BRS scheme, although in the current climate how many schemes are likely to be proposed is questionable. Witnesses from the Local Government Association could not think of any bodies apart from the Greater London authority proposing a project. However, as and when the schemes arise, it would be a useful discipline and serve to concentrate minds if local authorities knew from the outset that they would have to take the business community with them and produce something that is acceptable to a majority of them through the double-lock mechanism, which is a sensible safeguard.
I am grateful to the Minister for publishing the consultation guidance, as he promised he would, last Friday afternoon. I do not disagree with the aspirations that it sets out for the early involvement of the business community, but the fact is—I speak as one who has been involved in local government for much of my career—that some local authorities are more proactive and assiduous than others about involving their business communities. A mechanism that requires local authorities to engage with their local businesses, because they need businesses’ votes at a very early stage, would surely be more effective.
Derek Twigg (Halton) (Lab): Can the hon. Gentleman give an example of a local authority that does not consult or involve its business community in any of its decisions? The local authority in Nottingham consulted the local business community, although it ended up disagreeing with it.
 
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Prepared 28 January 2009