 House of Commons |
Session 2008 - 09 Publications on the internet General Committee Debates Business Rate Supplements Bill |
Business Rate Supplements Bill |
The Committee consisted of the following Members:Alan Sandall, Gosia
McBride, Committee Clerks †
attended the Committee Public Bill CommitteeThursday 29 January 2009[Mrs. Janet Dean in the Chair]Business Rate Supplements BillWritten evidence to be reported to the HouseBRS
06 Fitness Industry
Association 9
am Ordered, That
the Order of the Committee [20 January] be amended, in paragraph
(1)(d), by leaving out ‘and 1.00 pm’—(John
Healey.)
Clause 16Interaction
with BID
levy Amendment
proposed (27 January): 30, in clause 16,
page 11, line 37, leave out subsection (1)
and insert— ‘(1) Where a
person is, by reference to a hereditament, liable for BID levy in
respect of all or part of a financial year in respect of which the
person is, in relation to that hereditament, subject to a BRS imposed
by the authority, the chargeable amount payable in relation to the BRS
shall be offset in accordance with subsection
(2).’—(Robert
Neill.) Question
again proposed, That the amendment be
made.
The
Chairman: I remind the Committee that with this we are taking the
following: amendment 31, in
clause 16, page 11, line 43, leave
out— ‘to
the extent specified in the
rules’. Amendment
32, in
clause 16, page 12, line 4, leave
out ‘subsection
(4). Amendment
17, in
clause 16, page 12, line 8, leave
out paragraphs (b) and
(c). Amendment
33, in
clause 16, page 12, line 9, at
end add— ‘(5) This section
does not apply to the Crossrail
project.’. Clause
stand
part. New
clause 1—BIDs: supplementary
provisions— ‘(1)
The 2003 Act is amended as
follows. (2) After section 41
insert— “41A
Additional arrangements where business rate supplement
imposed (1) In any business
improvement district where a business rate supplement under the
Business Rate Supplements Act 2009 has been imposed, a property owner
BID levy may be imposed on the owners of non-domestic property, or a
class of such owners, in the
district. (2) A non-domestic
ratepayer who is liable to pay the BID levy on a hereditament is not
liable for a property owner BID levy on that hereditament, and may not
take part in a property owner ballot in respect of that
hereditament.” (3) In
section 46(1) (description of non-domestic ratepayers liable for BID
levy to be specified) insert at end “, and, where applicable,
the description of property owners who are to be
liable.
(4) In section 49 (BID proposals) after subsection
(2) insert— “(3)
A levy on property owners may come into force only where it is approved
by a ballot of the property owners in the proposed business improvement
district who are liable for the proposed property owner BID
levy.” (5) In section 50
(approval in ballot) after subsection (6)
insert— “(7) A
property owner BID levy is not to be regarded as approved by a ballot
held for the purposes of section 49(3) unless the two conditions set
out in subsections (2) to (6) are
satisfied.” (6) In
section 55(2) (regulations about
ballots)— (a) in
paragraph (b) after “ ratepayers” insert “and
property owners”,
and (b) after paragraph (h)
insert— “(i)
enabling the billing authority to construct a list of all property
owners in the BID area for the purposes of holding a property owner
ballot and
billing.”’. Amendment
45, in title, line 3, after
‘development;’, insert
‘to make provision about business
improvement districts in consequence of the imposition of a business
rate
supplement;’. Mr.
Nick Raynsford (Greenwich and Woolwich) (Lab):At the end
of our sitting on Tuesday, I was near the end of my speech outlining
the case for new clause 1 and amendment 45. I have a few additional
points, which I will cover briefly now to complete the
case. The
advantage of the proposal for a landowner levy to be an option in areas
where there is a BID and where there might be an adverse impact from
the introduction of the BRS, is that it would be permissive. There
would be no obligation on local authorities to produce a register of
landowners, which could be an onerous and expensive operation and could
involve abortive expenditure. It would apply only in those cases where
BIDs were up and running, where there would probably be a greater
understanding of the ownership structure in the area. There would be an
incentive to ensure that the BID, if it was working successfully, had
the prospect of continued viability should it be threatened, as we
heard from witnesses who gave evidence last week, by the arrival of the
BRS. I therefore believe that there would be considerable
advantages.
I accept,
however, that more work might be needed if this particular option is to
be progressed. There would almost certainly be a need for further
guidance on the processes involved in compiling a register. If I can
persuade my right hon. Friend the Minister for Local Government
consider the proposition, I would be happy to offer any further
thoughts outside the Committee on how that process might be
undertaken.
It will be
important to conduct some further research. A research study was
commissioned precisely because of the anxieties about the
non-contribution of landowners towards BIDs. I believe that that study,
commissioned by the Department and undertaken by the university of
York, has completed two stages. Stage 3 has been postponed because of
the expected arrival of the BRS; that is an entirely proper approach by
the Department, as it avoids anticipating conclusions to a research
study that could be influenced by the impact of the
BRS. It
would be sensible to have a specific element in the research study
looking at the experience of introducing, on a voluntary or a
permissive basis, a landowner levy in one or more BIDs districts, where
the imposition of a BRS can be anticipated and where there might be an
impact. One might suggest the possibility of a control study, using one
or two BIDs districts without the landowner levy and one or two with
the landowner levy, to compare and contrast the experience of those
two. There
are very strong grounds for considering the option. The issue has been
with us right from the origin of BIDs. We heard evidence that the
success of BIDs might be undermined following the introduction of the
BRS if progress is not made on the funding package to keep BIDs viable,
and we know that the contribution of landowners could be
critical. I
hope that I have said enough to persuade my right. hon. Friend that the
idea is worthy of further consideration. I accept entirely that my new
clause and amendment are unlikely to be accepted today. I shall be
happy not to press them if my right hon. Friend indicates that he is
not happy to accept them, but I hope that he will be willing to give
further thought to the
concept.
I will speak
briefly to the amendments proposed by the hon. Member for Bromley and
Chislehurst, but also to amendment 17, which stands in my name and that
of my hon. Friend the Member for Solihull. First, on amendment 30 and
the consequent amendments, an automatic offset—which I believe
is the underlying principle—is problematic. In many areas BIDs
and business rate supplements will be doing entirely different things.
With reference to our previous debate, had there been a ballot in both
cases, it would have been easier to reconcile the two, because that
would have demonstrated that the business community had opted for both.
However, an automatic offset is potentially problematic.
The new
clause, to which the right hon. Member for Greenwich and Woolwich
spoke, is attractive and absolutely right. During evidence sessions, he
consistently drew attention to the lack of a mechanism to enable a more
formal role for property owners, as opposed to tenants, to participate
in BIDs and a BRS. I am therefore attracted to his proposals. As he
said, this is an exploratory process and he does not intend to press
them to a vote. We are all the better for his having done that and I
congratulate him on raising those points.
Amendment 17
takes a different approach to that proposed by the hon. Member for
Bromley and Chislehurst in his amendment, in that it seeks to give
flexibility to local authorities. Our colleagues at the Local
Government Association may not be happy with some of my remarks about
ballots, but perhaps they will be slightly happier with these ones.
Under amendment 17, a local authority that wished to put in place a BRS
across its entire area, where there might be one or two BIDs, could
take a different approach to BIDs within that area, depending on local
circumstances—for example, how advanced the BID was or how close
it was to concluding. Of course, that would be done in consultation
with the business community in the area, because there might be
specific reasons why an offset would be preferable in that area. In
conclusion, amendment 17 would give flexibility to a local authority,
in consultation with its local business community, to achieve a local
solution.
The
Minister for Local Government (John Healey): It is a
pleasure to serve under your chairmanship this morning, Mrs.
Dean. I hope that the Committee will make as much progress as it did on
Tuesday.
We have had a
full debate on this group of amendments, which is right because of the
number of concerns voiced in last week’s evidence sessions. The
concern to protect the future success of BIDs was clearly part of our
thinking when framing the legislation. Interesting and important points
have been raised about the interaction between BIDs and a business rate
supplement, and our debate has been well informed by and drawn from the
evidence that we took last week. That underlines the value of the new
Public Bills system, which allows evidence taking before the start of
the scrutiny sittings. To help the Committee to consider the proposals
in two stages, I shall deal first with the amendments that suggest an
automatic offset for a business improvement district levy from the
business rate supplement; and, secondly, with the new clause tabled by
my right hon. Friend the Member for Greenwich and
Woolwich. Like
other members of the Committee, I listened carefully to the evidence
last week and to this debate. I am conscious of the arguments and
recognise the concerns about BIDs within any new system. It is
encouraging that there is—unlike in 2003—a very clear
view on all sides of the House about the importance of the success and
future value of BIDs. We want them to continue to thrive alongside a
business rate supplement. The fact that we are so conscious of
BIDs’ value is a real tribute to the work that my right hon.
Friend the Member for Greenwich and Woolwich put in as the Minister
responsible for that policy and legislation five years
ago. Let
me explain why in many ways the amendments cut across the ethos that we
have tried to enshrine in the Bill. We aimed to establish the principle
that local authorities will work together with businesses in their area
to develop proposals for major investment and projects that will
strengthen the long-term economic development and success of their
area. In other words, the responsibility and decision making will be
devolved to the local level. The Bill, therefore, essentially gives a
decentralised but circumscribed power to local authorities to play that
future role in the economic development of their area.
In keeping
with the desire to decentralise such decisions so that they can be made
appropriate to the areas to which they apply, authorities will also
have flexibility—again, within certain limits—to design
the levy, as well as to determine whether to introduce a BRS and decide
to which projects they should contribute funding. Local authorities can
therefore decide whether to offer more generous safeguards to business;
to set the threshold for the liability to pay the BRS above the
£50,000 that we propose; and even to decide to exclude empty
properties from liability. With that general approach, it is only right
that we should leave to the local level the decision on whether there
should be an offset for those paying BID levies. The Bill offers local
authorities the power and scope to make that decision. If Members pause
to think about this, they will see that it is self-evident that
circumstances will vary considerably in different local areas with
different BIDs. The Government have therefore framed the legislation to
make provision for the arrangements of BIDs to
vary. I
turn now to amendment 17, which stands in the name of the hon. Member
for North Cornwall. Clause 16 in general requires the levying
authorities to set rules on the extent to which BID levies can be
offset against a BRS liability. However, the clause also requires those
authorities to apply the same rules to all BID levies throughout their
area. I am not sure whether it is what the hon. Gentleman intends, but
treating BID areas differently could allow levying authorities to draw
up different rules for different BID areas. That could contravene some
of the state aids legislation and competition rules and therefore
favour certain types of undertaking in certain areas. The hon.
Gentleman quite rightly described the proposition in amendment 30 as
problematic, but the proposition in amendment 17 is equally
so. Amendment
30 would require an offset for BIDs in all circumstances except, of
course, Crossrail and London. The evidence that we heard from the chief
executive of British BIDs, Dr. Julie Grail, was particularly impressive
and informed, as well as extremely helpful to the Committee. I took on
board and understood her concerns about BIDs, particularly in areas
where there may be a BRS and there is a desire to introduce new BIDs or
perhaps to refresh the mandate to continue a BID. I will give further
thought to her views, because they were echoed by my right hon. Friend
the Member for Greenwich and Woolwich, who said that he had a genuine
concern that reflected Dr. Grail’s.
9.15
am Beyond
the concern about the risk and therefore about the protection of BIDs
within a BRS system, it is important that this morning we subject the
case in principle on whether there should be an automatic exemption to
careful scrutiny. Doing so will lead to a judgment, which has to be
made, on whether that is the right approach. BIDs and the BRS are
different policy measures designed to deal with different types of
project and activity. In deciding whether to have an offset, levying
authorities will need to consider the benefits from a BID to those
paying for it and the benefits from a BRS-funded project to those
paying the supplement.
Although we
followed the approach to BIDs to a great extent in framing the
legislation for the BRS, the two are different. That is one reason why
the power to levy for a BID lies with lower-tier local councils, while
the power to levy a BRS is restricted to the upper-tier or unitary
authorities in an area.
There are
several other differences between the two. First, they are different in
purpose: a BID is essentially short term, and the levy generally funds
immediate activity, such as community wardens, street cleaning,
pedestrianisation projects and CCTV cameras; a BRS, in contrast, is
longer term and more suited to large-scale investments and capital
projects. BIDs also tend to reflect directly and immediately on the
bottom line for individual businesses. A BRS, on the other hand, brings
longer-term, much wider and perhaps less specific and less easily
quantifiable benefits for an area, including the businesses in it. BIDs
typically run for a term of three to five years—their mandate
must be re-established every five years. In contrast, the BRS is for
longer-term investments—there is no fixed time limit. For
instance, for Crossrail, the Mayor proposes to use a BRS for a 24-year
term. The
uses of the funds are also different. Generally, funds raised from BIDs
support revenue spending, and they often raise the lion’s share
of the funding for a particular project in an area. On the other hand,
the
BRS—certainly for Crossrail—supports the capital required
for a long-term project. The geography, too, is generally different.
BIDs are specifically designed and set up in a highly localised
area—often, but not exclusively, a town centre—so they
are small in scale. The BRS, in contrast, is designed to benefit a much
wider area, and the liability is therefore applied in a wider area. It
may often apply to more than one local authority area, as in the case
of London, and perhaps others in the
future. Finally,
in many cases, the businesses that are liable and paying for a BID will
be different from the businesses that will be paying a BRS,
particularly given the threshold that we propose to set. In other
words, the majority of businesses paying for a BID are unlikely to fall
into the category that will be liable to pay a
BRS. We
heard from the Confederation of British Industry, British BIDs, the
Royal Institution of Chartered Surveyors and the Mayor in his written
evidence, and it is quite telling that their view is that BIDs are
different from the BRS. The argument that the hon. Member for Bromley
and Chislehurst advances in his amendment—that there should be
an automatic offset—does not, therefore, have a strong,
principled basis, and I hope that he will not press it to a
vote.
In fact, the
hon. Gentleman did, in many ways, help me make my arguments. In our
earlier sittings, he accepted that there are clear differences between
BIDs and the BRS. He acknowledged that there may be some overlap, but
that is precisely why the Bill gives the levying authority the power to
consider whether there should be an offset when a case can be made that
there is an overlap in a local project. That is why there is
flexibility in the
Bill.
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