Mr.
Field: My hon. Friend makes some interesting points about
consultation. Does he not accept that, particularly in relation to
quite a few local programmes, all too often there are some deep-rooted
interests whose concern, however much consultation they get, is the
outcome of a particular inquiry? How would he address the fact that
there is always a small minority that can be consulted until the cows
come home—in whatever efficient or inefficient way—but
that ultimately, if the outcome of the inquiry does not go its way, it
feels that it has not had a fair
say?
Mr.
Binley: I thank my hon. Friend for that interjection
because it raises an important point. The obvious answer is to bring in
professionals. However, to do that throughout the whole nation would be
massively expensive. The alternative is to ensure that local government
is much more equipped to deal with consultations from its own
perspective. It should not see a consultation as simply asking the
questions to get the answers that it wants. Furthermore, in a
consultation where there has been a sizeable view in opposition to the
council’s plans, it should not then override it as being
meaningless and ignore it. There is no reason why it should. There is
no law that says, “You have to take note of a given
consultation.” There is also no sanction where people who do not
have a vote are involved in that consultation, and therein lies the
serious problem. The whole question of consultation therefore needs to
be looked at as a separate issue in local government. However,
consultation is not the answer to reassuring local businesses regarding
projects where the projected amount that they will need to pay is less
than 33 per cent. by the levy of the rate. The second reason why they
need reassurance is that very fact in itself.
I wish I
could tell the Committee that the projections of a given capital
project made by local authorities were worth putting great faith in.
The truth of the matter is that, over the length and breadth of the
country, assessment of projects by Government, and especially by local
government, have been way off target when the total is presented at the
end of the project.
I shall cite
a situation where a local authority says that the cost to be generated
from a local rate of a given project is only 30 per cent. of that rate,
so there is no need for the ballot. We then find, after the ballot is
taken and the rate is levied, that the cost of VAT contribution turns
out to be less, in total, than was projected by the local authority.
The business rate contribution therefore becomes 40 per cent. of the
total. Do the Government then give that money back? There is nothing in
the Bill to say that they should. Again, the situation will simply be
created where business feels that it has been conned.
Business sees
itself as the milch cow for the Government and has done for some time.
Not only are we going to see increasing congestion charges, much of
which will
be paid by business, but workplace parking levies are being introduced
as well. We are seeing charge after charge being levied on business, as
though it can continue to provide a massive share of the money spent by
Government at all
levels. 11.15
am The
Bill will simply open up the fear that, create more suspicion that and
add to the thought that the Government’s only concern for
business, when it comes down to action rather than words, is that it is
a milch cow and is there for local government to grab whatever it can
in its interests, and not necessarily in the interests of business. The
only way to convince business that it has a proper say in this matter
is to give it a proper vote on every project that requires a
supplementary business rate.
The
Chairman: Before I call the Minister, as the clause before
us is central to the Bill, if hon. Members want to debate it I suggest
that they do so now. I will accept a more wide-ranging debate, rather
than wait for a clause stand part debate at the end. That is a warning
shot for anybody who has anything else to say, before I call the
Minister.
John
Healey: I welcome you to the Chair, Mr.
Atkinson, particularly as we enter the scrutiny period of the Bill.
Like other hon. Members, I look forward to serving under your
chairmanship and that of your co-Chairman, Mrs. Dean. It is
great to see such a strong scrutiny Committee, made up of hon. Members
who have long experience in local and national Government, from the
north and south of the country, and those with business experience that
they can bring to bear on our deliberations. That can only strengthen
our scrutiny of the Bill, and I look forward to that.
We are
probably all surprised at the level of interest in this Bill in certain
sections of the media over the weekend, and look forward to the
amendments that may be tabled in the other place when the Bill arrives
there.
The
amendments that we are debating strike at the core of the Bill, which
is the proper relationship between a local authority and the businesses
in its area, and the degree to which there is a common, shared interest
in the future prosperity and economic development of that area. I think
that all hon. Members would accept that, as we heard in evidence from
local government and business last week, we are considering the
legislation in an era that is different from two decades ago. We must
be careful not to base our judgments about this legislation on outdated
mindsets, or myths about local government wanting to soak local
business for everything it can get. Frankly, we put have put those days
well behind us, and I was particularly encouraged to hear confirmation
of that from the business organisations that gave evidence last
week.
We need to
deal with the sort of relationships that are currently in place and,
through this Bill, how they need to be strengthened. We are legislating
for the potential use of a supplement and a power not just next year or
the year after, but—if appropriate and if determined by a local
authority with its local businesses—at any time in the future,
should there be a strong case for doing so.
Mr.
Field: On that general point, is the Minister personally
uneasy at the idea that we lack a democratic safeguard in this regard?
He is quite right that local authorities work much more closely with
their local businesses in trying to plan for the regeneration of
particular parts of the local authority area. However, as we have
repeatedly pointed out, there are many business men and women who do
not live in the locality. In other words, they have no say on the
election of a particular authority. Does the Minister instinctively
feel uneasy at the lack of any democratic safeguard, notwithstanding
the desire of business and local authorities to work together more
closely?
John
Healey: No, because the democratic safeguard is in the
elected local government. The requirement is for elected local
government to account for its decisions, and to be subject to scrutiny,
public cross-examination and challenge and, ultimately, to being voted
out of office for those decisions. That is why the hon. Gentleman will
see that, when we get to clause 2, the proposed levying authorities all
have that direct democratic mandate. Some have argued that transport
authorities ought to have similar powers, but they do not have a direct
elected mandate—the democratic safeguard. In the end, we elect
our politicians locally and nationally to make decisions that sometimes
have to mediate or adjudicate between competing interests, which can
sometimes never be reconciled. Ultimately, our job is to stand up and
account for our decisions. If people do not like them, there is a
strong debate and then, essentially, the opportunity to get rid of us.
I am not uneasy in the same way as the hon. Gentleman is, because we
framed the Bill to be based in democratic elected local government.
That is local government’s proper role, and the proper place to
have the ultimate
accountability. The
hon. Member for North Cornwall moved amendment 1 and indicated that he
might want to press it to a vote. I hope that I can dissuade him from
doing so. I shall then come on to the two central issues at the core of
our debate and the other amendments: whether there should be a ballot
in all cases, and whether London’s Crossrail is an
exception. Amendment
1 is directed at the question of economic development. I hope that the
hon. Gentleman will find that the draft guidance, which was published
on Friday, underlines what is already in the Bill. It clearly says that
a business rate supplement and the funds it raises must be spent on
projects that promote economic development. Before we get on to where
we disagree, let me attempt to stake out territory that I am confident
we agree
on. First,
all members of the Committee and all our parties would accept that
local authorities have a central and important role in the economic
development and prospects of their area. Sir Michael Lyons was strong
in his conclusion on that in his recent report. The all-party,
Conservative-led Local Government Association is strongly of that view.
The sub-national review of economic development and regeneration, which
was published in summer 2007, concluded that. Lyons and the
sub-national review, on the proposition that local authorities have an
important role and require policies and some freedoms in order to play
that role effectively, said that they should have the power to raise
additional funds to promote economic development. That is precisely
what the business rate supplement will allow them to do.
While I am on
areas of agreement, I was encouraged by some words of David Frost. I
was not surprised, because I know the British Chambers of Commerce and
its director-general well. He confirmed
that “in
a number of parts of the country...there is a need for more local
determination and...the ability to raise additional revenue from
the business community”——[Official
Report, Business Rate Supplements Public Bill Committee, 20 January
2009; c. 21,
Q85.] The
proposition in amendment 1 is to prevent a business rate supplement
from being levied unless those businesses that will pay the supplement
are satisfied that the project to be funded by the BRS will promote
economic development of the area. I agree with that proposition, but I
can say to the hon. Member for North Cornwall that it will not come as
a surprise to any businesses. As part of the different relationships
that are already in place from a couple of decades ago, local
authorities already develop and consider their long-term plans for
economic and social development, and environmental improvement, through
their sustainable community strategy, local strategic partnerships and
detailed discussions with business. In almost every area of the
country—every one of us could point to significant business
people in our own areas who are playing a part—business is
involved with those discussions and ultimately, the decisions that
local authorities take.
The latest
example is the set of local area agreements that the Government agreed
with local government last year. In all except one of the 150 local
area agreements, local authorities, in wider conversations and with
wider support, have picked priorities for themselves that reflect
concerns about improving their local economies. For example, six of
Cornwall’s 28 local area agreement priorities are economic in
nature; three of Bromley’s 30 targets are focused on
the economy. The hon. Member for Cities of London and Westminster may
be interested to know that his local authority is the only local
authority out of the 150 in the country not to make any of its
priorities economic. That is a matter for the local authority, and no
doubt it has discussed it with local businesses.
Coming back
to the BRS, that sort of discussion and consultation will be part and
parcel of any consideration that a local authority gives to the
potential role for a business rate supplement, even before the formal
consultation stage, which we shall come to later in our deliberations.
Any proposal will need to explain clearly why it is necessary to
consider the project, even before consideration is given to funding it.
The Bill and the draft guidance that I have published make it clear
that any proposed project plan should set out how the project will
improve the economic development of an area. I sympathise with the
proposition of the hon. Member for North Cornwall, but in practice the
amendment would mean that the local authority would need to demonstrate
that the majority of the business community that might be affected by a
BRS was satisfied that it would promote economic development before it
could go ahead. It is difficult to see how one could satisfy that
requirement without a ballot.
In other
words, the local authority would be balloting on whether the majority
of the businesses thought that the project proposed would contribute to
economic development, and not on whether businesses accepted or agreed
with the idea that a BRS might play a part. That is clearly absurd. The
amendment would lead to serial balloting in the process of a BRS and
that is its
ultimate flaw. I shall come to the arguments of principle regarding
balloting in a moment, but if the hon. Gentleman presses amendment 1 to
a vote, that is the logical and practical flaw in his
proposal. Not least
because of my local involvements, but also as a Minister, as the
Committee would expect, I understand keenly and clearly the concerns
that businesses have about the business rate supplement, although they
are from time to time rather overstated, which does not necessarily do
their case much good.
Mr.
Binley: I find that remark rather surprising. Is the
Minister saying that a robust opposition to a given Government proposal
will be less well favoured because of its robustness? Is that what he
is telling us? If so, that is a worrying
situation.
John
Healey: No—quite the opposite. The strength of the
case and the extent to which it is likely to be carried in the
decisions that the Government or this House take rest on how well it is
put, not simply on how strongly it is put. It is as true in this field
as in any other that organisations sometimes do not best serve their
cause by overstating the concerns and anxieties that are at stake.
Nevertheless, in framing this Bill we have taken the concerns of
business
seriously.
11.30
am One
of the safeguards in the Bill, which we will come on to in more detail,
is the requirement for any local authority, if the BRS is expected to
contribute more than a third of the total proportion of any project
cost, to be subject to a ballot. That is despite equally strong
arguments from the all-party Conservative-led Local Government
Association that there should be no requirement for a ballot, and that
any ballot should be a decision for the local authority itself, as
appropriate. The all-party Select Committee also takes a view that is
different from ours. It does not seek the requirement to have a ballot
where a project’s cost amounts to more than a third from
BRS. The
evidence sessions bore this out. On the one hand, we had the CBI saying
that we should have ballots in every case, whatever the contribution
from the BRS. The LGA argued that ballots are unnecessary and should
not take place unless the local authority decided it was appropriate.
The most interesting, and overall perhaps the most balanced, evidence
came from the director general of the BCC. He was clear with us in
recognising the constructive relations that generally exist between
local authorities, business organisations and the business community
now. He also recognised the concerns that businesses have about the
prospect of legislation enabling a BRS.
However, the
director general ended by confirming to the Committee, in response to
questions from my right hon. Friend the Member for Greenwich and
Woolwich, that the BCC accepted the third threshold proposed in the
Bill. That threshold is designed to recognise that business should not
have a blanket veto on any business rate supplement as a contribution
to a major project for an area. However, it is also designed that,
where a business is likely to do more of the heavy lifting in the
financing of a project, it should have that reassurance and extra
opportunity to vote on its introduction.
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