Business Rate Supplements Bill

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Robert Neill: I shall give the Committee a highly publicised example that is now in the process of being overturned. When the previous Mayor of London chose to consult on the western extension of the congestion charge, he went through every statutory hoop and requirement that he was obliged to go through in such a way as to be proof against judicial review. It was clear that the businesses, and indeed residents, did not want the extension to be imposed, but the regime, which is the same as the one that will be in place for BRS, enabled him to ignore the opposition and go ahead. The fact is that, under the current rules, a situation could arise where a local authority—[Interruption.] I think the Minister wants to intervene.
The Minister for Local Government (John Healey): I am trying to follow the hon. Gentleman’s logic. Given the example that he cites, his logic seems to be moving towards the proposition that there should be a ballot in London, as elsewhere, if there is to be a BRS. That appears to contradict some of the amendments that he will speak to later.
Robert Neill: I am grateful to the Minister for raising that point, but if he follows my argument, he will see that that is not the case. I shall discuss later why Crossrail is a different case. Under the present regime, if a local authority has the political will to impose a scheme, it is not obliged to take the majority of businesses with it. The evidence and the example that I cited demonstrate that that was the case under the previous Mayor of London.
The proposal in the Bill and the existing arrangements give local authorities the opportunity to decide, by a narrow political majority, to implement a scheme, even though it might have been rejected by businesses or there is clear evidence of their opposition. It would be better to test the proposal and get businesses on board. I hope that the hon. Member for Halton is correct in his aspiration that local authorities will not go down a route that will bring them into conflict with local businesses, but localism always carries that risk. Businesses in the present climate need to have some protection against that.
Another point that worries many businesses and is flagged up in the consultation document is that, without the ability to have a ballot, there is a risk of an accumulation of burdens being placed on them. We will come to automatic set-offs for BID levies later, but the BRS and BID schemes, as well as the possibility of community infrastructure and workplace parking levies, could impose a cumulative burden. A real concern in the business community was demonstrated throughout the evidence sessions about that cumulative burden being, for many businesses, the straw that breaks the camel’s back.
For all those reasons, if the Government are genuine about giving local authorities a power to raise revenue that is truly and demonstrably additional, it is important that the local businesses who pay—who may pay substantial sums—are able to have a say on whether they are convinced that there is genuine additionality. If the case is made out and the local authority engages with its business community from the start, it is much more likely to get a result that everyone buys into, which would be to everyone’s advantage.
I hope that the Government will think again about the amendments. I cannot for the life of me see why they would not. The Minister will probably say that he has come to a pragmatic and rational decision that a third of the cost is a reasonable ballpark figure for the threshold. It might be, but he could equally say the same about a quarter or a fifth, because an element of arbitrariness is inevitable in any threshold. Some sort of de minimis exception might be better, and the Minister conceded that we could discuss that. If there is not to be such an exception, there should be a ballot.
On why we do not take that stance on Crossrail, I am perfectly happy to say that Crossrail is and should be an exception, for the perfectly good reason that Crossrail is a project that has been discussed and consulted on within London among business rate payers and voters. London has had an election—a democratic process—in which all the major party candidates standing for Mayor were committed to Crossrail and the funding package for the project. Londoners had a chance to have a say on Crossrail.
The Parliamentary Under-Secretary of State for Communities and Local Government (Mr. Sadiq Khan): Will the hon. Gentleman remind us how many people with businesses inside London but who live outside London had a say in that decision?
Robert Neill: It is interesting that the Under-Secretary says that, because of a point that struck me during the evidence sessions. Is he hinting that there should be the reintroduction of the business vote in such circumstances? I am sure that his hon. Friends would not like that. My answer to him is that not only was there a democratic election in London, but all the representative business bodies supported the Crossrail funding package. Equally, those same people said, “Although we accept that it works in London for Crossrail, we do not want it imposed elsewhere.”
Mr. Field: If my hon. Friend will allow me to half-answer the Under-Secretary’s question, of course a significant number of businesses in the City of London, with people who are employees or partners of the business but who live outside, were able to have their say. I accept that it was by no means an entirely satisfactory arrangement, but an important cross-section of the business community had its say—including those in the business community who live outside London. The City of London corporation, as the Under-Secretary and my hon. Friend will be well aware, keenly supports Crossrail, albeit not without making certain criticisms—for example, about the route, which we shall discuss later. None the less, in that rather unsatisfactory way that we have in the context of the corporation, the business vote has had a certain say. In fairness, I should say that the business community is very much in favour of Crossrail, and wants it to be built as soon as possible.
In addition, because of how the Crossrail process has been gone through—by the previous Mayor and the current on, as well as the candidate for the Liberal Democratic party and others—there has been a genuine attempt at dialogue and engagement across the political parties and a broad political consensus within London. That was reflected in support for the project before the scheme was brought forward by the business community—London First, the London branch of the British Chambers of Commerce and the CBI supported a BRS as part of the funding package. They were not saying that it was an ideal measure, but in the case of Crossrail, they said that they were prepared to chip in and that that was a mechanism through which they could move the project forward. That is a pragmatic and sensible enough view, but it does not mean that that approach is appropriate anywhere else in the country.
What amused me in part of the Under-Secretary’s comment is that he seemed to present my hon. Friends and I as people who are denying the rest of the country a great opportunity. I suggest that what we are seeking to do is to save the rest of the country a potentially great burden. The Government are trying, through characteristic sleight of hand, to take the consensus and agreement that a BRS scheme is an appropriate mechanism for Crossrail and use it as a stealth device to increase tax burdens elsewhere in the country, where we know from the LGA there is no demand. There is a demand in London—the Mayor of London submitted evidence saying why that was so, as did London business. There is no such evidence elsewhere.
John Healey: Stealth tax? I am struggling with that. It is a common phrase that we hear from the party opposite, but how can the hon. Gentleman describe a business rate supplement as a stealth tax when there has been a public report from Sir Michael Lyons, a White Paper, and parliamentary scrutiny in both Houses of the legislation? If a local authority believed that a business rate supplement was appropriate for its area, there would be lengthy discussion, formal consultation and, in some cases, a ballot. I simply cannot see how this measure merits the description of stealth tax, which surely implies something that people were not aware of, not expecting and were suddenly confronted with. Does the hon. Gentleman not accept that, for the purposes of serious scrutiny, that is simply not helpful or accurate?
Robert Neill: I am surprised that the Minister departs from his normal precision in following my argument. I appreciate that he may have had one or two little distractions over the weekend, but perhaps he could follow my argument carefully. I accused the Government, and I do not resile from the accusation, of using the consensus on the use of the BRS as part of the Crossrail funding mechanism as a stealth device to then impose a tax-raising power elsewhere in the country, where there is not the same level of demand as has been demonstrated in relation to London and Crossrail.
Mr. Nick Raynsford (Greenwich and Woolwich) (Lab): The hon. Gentleman presents his position as defending the rest of the country from the imposition of a burden. I shall give him the benefit of the doubt and assume that he does not see his role as a London MP as imposing an unreasonable burden on London, because that would be the logic of his position. He clearly does not think that, because he thinks that Crossrail will deliver benefits which are such as to outweigh the cost on business of paying the BRS in London. Why does he believe that a similar arrangement should not be possible outside London?
Robert Neill: With respect, the right hon. Gentleman’s logic is flawed. In the case of Crossrail and London, where there is a broad consensus, it is perfectly reasonable to go down a route that was established before the Bill was introduced: there was commitment and sign-up to a BRS part-funding the package for Crossrail. However, the Government then coupled the Crossrail project with rolling out the broader Lyons proposals, which was not necessary.
Why do I say that we are protecting part of the country from a burden? I say it simply because, without a ballot in all cases, there is the prospect of a BRS being imposed on businesses in areas where there is no demand. In London, the consensus had arrived before the Bill appeared. What the Government are doing is using inverse logic—saying that because there is agreement in London without a ballot, we do not need a ballot anywhere else. That is the false logic that is being deployed in the debate, not any argument put by the Opposition.
11 am
Mr. Field: Will my hon. Friend make it clear that if we were discussing the Bill 10 years ago—in other words, before the Crossrail Bill had been considered—we would have been arguing just as forcefully for a ballot on Crossrail? However, we are now a long way down the line in the Crossrail process. The amendments are therefore geared towards involving the business community through a ballot system. As my hon. Friend rightly says, there is a certain level of arbitrariness regarding the threshold—the proportion of the overall spend—before a ballot is held, but we want to involve business as far as we can through a ballot.
Crossrail is a bit of a red herring. I can understand why Government Members are making a lot of it, but the reality is quite straightforward, because we are so far down the line, for want of a better phrase, in relation to Crossrail. Had the Bill been introduced 10 years ago, Crossrail would clearly have been part and parcel of the provisions on ballots that we are now trying to establish.
Robert Neill: I very much agree with my hon. Friend. We have to be realistic as far as Crossrail is concerned. We are where we are, and if we had not adopted the stance that we did in relation to Crossrail, no doubt the Government would have accused us of trying to block or sabotage Crossrail. They cannot do that, because we made it very clear that we are realistic about where we are with Crossrail, and that we want to get on with it. What they cannot do, although they are trying, is to use Crossrail as a shield against criticism of their proposals elsewhere in the country. If they want to deflect criticism or reduce our criticism of their proposals for other areas of the country, they could do so by accepting the amendments that we and the hon. Member for North Cornwall have tabled providing for a ballot in all cases. There would then be an appropriate safeguard for businesses and the criticisms would have far less force. They choose not to do so, so the situation is of their own making.
Mr. Neil Turner (Wigan) (Lab): I would like the hon. Gentleman to clarify two points. First, he talks about the consensus within London, but every party was in favour of Crossrail. How can one judge the degree of consensus when the people of London did not have the opportunity to vote against it? All the candidates in the London mayoral elections were in favour of it. Secondly, may I remind him that elections in London are held once every four years, but in the rest of the conurbations of England we have elections every year? These projects will take place over a number of years. It will tend to be large projects that are supported by the supplementary business rate, so there will be the opportunity for consultation over a number of elections. The situation will not be the same as in London, where a project could be introduced after an election and be sorted out before the next one.
Robert Neill: I have great respect for the hon. Gentleman, but he has not been listening to some of the previous arguments. The fact that all the major parties stood on the platform of supporting Crossrail—for exactly the reason that my hon. Friend the Member for Cities of London and Westminster gave, that everyone accepted that we were where we were—demonstrates that there was substantial buy-in among the voters. People could have voted for Respect, and I suspect that the UK Independence party and the British National party were also rather critical of Crossrail, but they did not, for obvious reasons.
We also had evidence from representatives of the London business community that in the circumstances, to kick-start Crossrail, London businesses were satisfied that the mechanism was one that they could live with. The fact that there are annual elections to the unitary authorities elsewhere in the country does not alter the argument. It is perfectly fine and helpful to have elections so that voters—the domestic council tax payers—can have their say on whether to have a council that continues with a BRS scheme. I do not have a problem with that, but that is no reason to say that non-domestic rate payers—those who contribute not through council tax, but through the BRS—should not have a ballot, so that they can have their say. The two are not mutually exclusive in any way.
In a rather larger nutshell than I had intended—although I hope I have enabled hon. Members, including Labour Members, to vent their views—those are the reasons why we proposed our amendments and have sympathy with those tabled by the hon. Member for North Cornwall. We certainly wish to see votes on such matters in due course. The other amendments in my name in the group are consequential, relating to the holding of a ballot in every case apart from Crossrail. I hope that that deals comprehensively with this group of amendments.
Mr. Brian Binley (Northampton, South) (Con): It is a pleasure to serve under your chairmanship for the first time, Mr. Atkinson.
I do not want to enter the private grief of Crossrail as regards London’s payment for it, but outside London many people are dubious about the scheme. They fear that it will cost about £25 billion, perhaps more, but do not see it helping them in any way. They feel that that amount of money could be much better used on infrastructure elsewhere.
Having got my bit about Crossrail out of the way, let me explain why a ballot of businesses is vital if we want acceptance of the concept from the business community. I need not tell the Minister about the need to reassure business, because the evidence is plainly in front of him, from almost every business organisation in the country. From my own anecdotal evidence, local business is frightened to death of giving government—particularly local government, which has not proved to be the most efficient instrument in this country for moving our society forward—the ability to raise even more money from the community, particularly the business sector and at a time when Government support for local authorities has been reduced over the years in percentage terms.
Let me tell the Committee why the business community is so concerned. That concern surrounds two major areas. The first concern arises from the appalling episodes and examples of consultation undertaken by local government the length and breadth of the country. We have one at the moment in Northamptonshire, where the portfolio holder responsible for the consultation has herself said that it has not been well organised. In fact, I have not seen one local government consultation that has been well organised.
The thrust of the Government argument seems to suggest that it is okay not to hold a ballot, if less than 33 per cent. of the total cost is to be borne by business, because there will be consultation. I would like the Minister to present evidence of quality consultation in local government. I would like him to tell me how many people with an expert knowledge of the art of consultation are employed by local government. I would like him to show me where consultation has been accepted by the local populace as being effective and meaningful, because in my experience the opposite is true.
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