Business Rate Supplements Bill

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Robert Neill: I understand the logic about the heavy lifting, but will the Minister address the point, raised by my hon. Friend the Member for Northampton, South and other Members, that the assessment of heavy lifting should perhaps not be in terms of the proportion of the expenditure as borne, but also of the quantum? One can envisage some schemes where a quarter will amount to a financial contribution that could fairly be described as heavy lifting.
John Healey: We deal with quantum concerns with the Bill’s proposal that there will be a 2p cap on the scale of a business rate supplement. That is an area where we were again urged strongly by all parties in the LGA to go a lot further, and we will come on to debate that.
Mr. Raynsford: Does my right hon. Friend not think it slightly odd that the hon. Member for Bromley and Chislehurst, who argued that Crossrail should not be subject to a ballot but that every other scheme should be, is now suggesting that the quantum of the contribution should be a factor? There can be no scheme that I can imagine in which there is a greater quantum of contribution from business than Crossrail. Is that not an indication of how hopelessly confused and intellectually bankrupt the Opposition’s case is?
John Healey: Quite so. I also think that it exposes the weakness of an approach that says that one specifies quantum figures in legislation because it is difficult to do so in a way that is appropriate for all parts of the country. My right hon. Friend is right. The Bill is framed so that, in the case of Crossrail, the quantum across Greater London would raise about £178 million a year. The quantum of a similar supplement raised across Northamptonshire would be just over £9 million.
Frankly, we in this House cannot legislate on that sort of thing without creating an inflexibility that would be totally dysfunctional. I understand the quantum question being a concern of business, but we are dealing with that by a cap on the size of the levy and by a threshold of a £50,000 rateable value above which businesses would be liable for any business rate supplement—at a stroke taking out the vast majority of businesses in any area.
Mr. Binley: What analytical statistical base did the Government use to set its figure of a third as the cut-off point for a ballot? I assume there is an analytical base, and I would love to have it explained.
John Healey: It is a matter of studying the impact assessment of any business rate supplement and, in the end, a judgment. We believe that the judgment strikes the right balance, as I described earlier. I shall come to that in a moment, but now I would like to turn to the two principal questions that underpin the different amendments of the Conservatives and the Liberals.
First, both parties’ amendments propose that there should be a ballot in all cases in which the levying authority wishes to introduce a business rate supplement. Second, they propose that the requirement to have a ballot should not apply to London.
Dan Rogerson: The Minister is accurately setting out the position of my party and, I believe, of the Conservatives, except in one respect. He just said that the ballot requirement should not apply to London, but that is not what our proposal says; it says that it should not apply to Crossrail. At some point in the future, when Crossrail has been funded and we are all happily taking trains through the heart of London, if other projects emerge, they should be subject to a ballot in the same way. We were specific about saying Crossrail, not London.
John Healey: I shall deal with in a moment. To all intents and purposes, for the discussions and the proposition before the Committee and before London—the business rate supplement—the proposal is to levy to the 2p limit. That proposal comes from the Mayor and will fund Crossrail for 24 years. The hon. Gentleman may be taking a very long view and seeking framework legislation for 25 years plus, but the core of the argument is not changed by the technicalities of his slightly deficient amendment.
Our third requirement for a ballot applies across the board—to be clear, it is not limited to any type of project or to any geographical area. The two principal questions raised by the debate are whether the Committee accepts that any contribution—however large or small a proportion of a project—from a business rate supplement should be subject to a vote and, secondly, whether we accept that Crossrail is unique and therefore warrants unique treatment in the legislation. I am disappointed that the hon. Member for Bromley and Chislehurst is still arguing from the Front Bench that London is an exception to the rest of the country—particularly when Crossrail is of national significance, not least with the national taxpayer putting in the largest single contribution to the funding package.
I cannot accept what underpins the hon. Gentleman’s basic argument: that there should be one rule for London and one rule for the rest of the country. In the gentlest terms, that is such a narrow view—one, unfortunately, that we suffered throughout the 1980s and 1990s, when Government economic policy could barely see beyond the limits of Greater London and the south-east, and through which so many of the economic problems and economic potential of the rest of the country were largely ignored. I do not want us to legislate for the BRS in a way that says, “We are interested in London, we will legislate for London and the rest of the country can go hang”. I cannot accept that as a basic proposition for the hon. Gentleman’s amendments.
Mr. Field: I do not wish to go down the narrow alleyway of a history lesson, but the Minister will be aware that many people in his own party are expressing concerns today at the rescue of the banking system—at the perception that it is a London rescue, with a lot of other industries obviously having great difficulties with the credit crunch.
I go back to the point I made earlier to my hon. Friend the Member for Bromley and Chislehurst. If we were discussing this Bill ten years ago, no doubt Crossrail would be part and parcel of these amendments. In other words, we would not be making any exception for Crossrail. It is simply a fact that Crossrail is so far down the line that it should be given the go-ahead and not necessarily be subject to the ballot safeguards that we regard as important. Looking forward—I go back to what the hon. Member for North Cornwall had to say—we are not trying to make London an exception; we are making the specific Crossrail project an exception.
John Healey: For the purposes of this debate and Bill, London and the Crossrail project are the same thing. To divide them is a false basis for argument. I am disappointed that the Liberal Democrats are taking such a London-only view, essentially overlooking the interests of vast swathes of the country, some of which is led by Liberal Democrat local councils.
Let me come to the two principal questions—first, the one of balance.
Robert Neill: With respect to the Minister—because I am sure he does not want to misrepresent what has been said—if he is saying that there is genuine concern for the rest of the country, I accept it. Can he answer why, if we are to pursue an evidence-based approach, there is no evidence from the LGA of anywhere else in the country with a desire to take up the powers proposed for them?
John Healey: Surely the hon. Gentleman accepts that any Government ought to be looking to the long term and ought to be capable of legislating and coming up with policy that is not simply in response to the demands placed on them. I hope that in this passage of the Bill we will see a different approach from his party from five years ago, when it raised exactly the same opposition to business improvement districts, through which we set a new framework, allowing local authorities to discuss and develop with local businesses propositions to benefit their areas. It was a visionary move and forward-looking legislation from the Government—and, in particular, from the then Minister who led it through the House, my right hon. Friend the Member for Greenwich and Woolwich—which has proved a great success over recent years. There are 67 business improvement districts in place, many in areas led by Conservative local councils. I encourage the hon. Gentleman to take that longer-term view of the legislation that the Committee is considering this morning.
Mr. Binley: Is the Minister not raising the same concern that we are—that the BIDs project was specifically designed to involve business at every stage of the process?
Mr. Khan: So why did you oppose it?
Mr. Binley: I did not. I was not here. I will speak for myself on this matter, so I do not want any of that nonsense.
Business is involved at every stage of the BIDs process, which has the effect of bringing business into the humble issue of community and its impact on the people whom we serve. That is the opposite of this exercise, which will drive business away because it will not be involved. It will just see the price at the end of the day and know whether it was right or wrong, whether it has been balloted or not, quite frankly. So the Bill is not doing what BIDs did, and that is one of its failures.
11.45 am
John Healey: I am grateful to the hon. Gentleman, who gives me the cue to go on to BIDs. He encourages me to use BIDs as a model, and others have cited them as the proper model for a BRS. However, the BRS is unlike BIDs in a number of ways. BIDs have a time limit of five years and their footprint is essentially localised. They are often there to support revenue funding for things such as improvements in local streets and police community support officers—things where the benefit to the businesses involved are direct and immediate. Unlike BIDs, schemes funded by the BRS—Crossrail is the clearest case in point—are likely to be considered appropriate for much wider areas and to offer much wider benefits, beyond the immediate interests of the businesses in that area and, because of the likely time scales, beyond the interests of those businesses that may, if the BRS is introduced, be paying it. So the BRS is different from BIDs, which leads us to our view that the balloting question needs to be dealt with differently.
Let me tie in the question of Crossrail at this point. Like Crossrail, any other potential project that might attract a BRS will almost certainly involve other sources of funding. Local council tax payers, through local authorities, make a contribution; national taxpayers, through central Government, make a contribution; and they are likely to do so precisely because of those wider benefits that such a project could bring across a wider area.
Let me say what for me is the principal question. Where other sources of funding are part of the package for a big project bringing wider benefits, and where there is a will to see investment from other sources so that such projects bring those wider benefits—just like Crossrail—those who argue for a ballot in all cases have to explain whether it is right that businesses should, in all those cases, have a vote and a veto on whether the project goes ahead? In other words, should business be able to block projects even if the will, the desire and the approval is there from people who are not in business but who have an interest in the benefits that a project could bring to an area? Is it right that businesses should have that vote and veto when they may be paying a quarter or a tenth of the project funding, or when a BRS may contribute a negligible proportion of it? That is the question at the heart of whether a ballot is right in all circumstances, and that is why we have taken the view that it is not right to give businesses a vote and a veto in all circumstances, whatever the proportion of funding for a project they would contribute, but that it is right to put a ballot in place where business is required to pay more—more than a third—of the project costs.
I now turn to the question of Crossrail. Is it unique and should it therefore warrant unique treatment in the Bill? In my view, Crossrail is a very special project but it is not unique. It is special in its scale. For the purposes of the BRS, it is also well developed: its business plan, project plan and funding package are clear. To that extent, it is well ahead of the field in relation to the potential use of the BRS. However, I think it is easy for Members of all parties here to consider that other major transport projects similar to Crossrail may be highly desirable, play a big part in economic development and bring benefits to other areas of the country—projects for which the BRS could play a part in the funding package. They may bring a similar relative investment and have similar relative economic importance as Crossrail.
The hon. Member for North Cornwall has argued that Crossrail is special because it has been subject to legislation. Some transport projects in the future, for which the BRS may be appropriate, may also require legislation. If they do, why rule them out of benefiting from a BRS, using that argument to justify a carve-out for Crossrail? The point is that, when Parliament has considered a project and given it the go-ahead—Crossrail in this instance, but potentially other transport projects in other areas—is it right that a business vote could stop the project later? Essentially, that is the argument advanced by the hon. Member for North Cornwall. He is trying to justifying a rather odd position, which, when I gave evidence, I described—perhaps a bit harshly, but I still maintain that this is the case—as illogical and intellectually inconsistent.
Crossrail is special—it is more advanced than any other potential project—but it is not unique in terms of what we, or other areas of the country, may want to use BRS to contribute towards. For that reason, it is not correct to say that it needs a special carve-out, and that we should invent a set of principles to cushion Crossrail and give it special treatment in the Bill.
I hope that the Committee will forgive me for dwelling a rather long time on that point. I shall deal with the points that have been raised and the amendments, but I dwelt on those questions because they go to the core of the Bill, and many other points that we will come on to are in a sense derived from the decisions that the Committee and Parliament will take on them.
We will discuss the provisions for detailed consultation and explore concerns about business consultation and influence on any potential use of the BRS under clauses 5 and 6, but I can say now that levying authorities that want to use the BRS will be required to draw up a prospectus, which will be the basis for formal consultation. The prospectus will need to set out the detailed plans for expenditure, including the time scales and funding sources, in addition to how the supplement will work, the assessment of economic benefits that could be brought to the area and the costs of the project; I have published the draft guidance that will help to frame that requirement to consult. The prospectus will allow businesses to see clearly and cross-examine the costs and benefits that may be proposed. I published the draft guidance at this stage partly for formal consultation over the next 12 weeks and partly to inform the Committee’s deliberations of the relevant clauses when we get to them. In summary, we are trying to strike an appropriate balance.
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