Examination of Witnesses (Questions 260-279)
MR IAN
AUSTIN MP, TRUDI
ELLIOT AND
ADAM JACKSON
29 JUNE 2009
Q260 Mr Plaskitt: So you say you
had to do the same in respect of the enterprise finance guarantee.
Mr Austin: Look, if people in
the region tell me that a scheme's having an impact, but it's
being wound up, then I'll go and bang the drum for the region,
but I can't promise that I can make these decisions. I mean, I'll
do everything I can.
Q261 Mr Plaskitt: Fine. In your
view, how is the support that Government are giving to businesses
in respect of business rate relief going in the West Midlands?
Mr Austin: You mean in respect
of empty properties, and so on?
Mr Plaskitt: Yes.
Mr Austin: Again, this is an issue
that was raised early on, wasn't it, and it's my understanding
that the legislation on this changed when the economy was in a
different position. But I think it's fair to say that the Ministers
did listen to us on this and reliefs were introduced for smaller
properties up to—I can't remember precisely—£15,000.
So I think it's fair to say that Ministers did listen and did
act, to that extent.
Q262 Mr Plaskitt: Are you satisfied
with the level of take-up of this relief in the West Midlands?
Mr Austin: I've not seen figures
on take-up, actually, but businesses that have been affected by
this have welcomed it, and the business representative organisations
welcomed it too.
Mr Plaskitt: Take-up is only about 50%.
Chairman: I think we may be at cross
purposes here; we are talking about this small business rate relief,
rather than empty properties, but perhaps if you haven't got the
figures, it will be possible to send us a note on take-up.
Q263 Mr Plaskitt: There are the
two reliefs, as you know. There's the empty property and small
business rate relief. Why not make the small business rate relief
automatic, and therefore solve the take-up problem?
Adam Jackson: That's something
that we've been looking into, and looking at with the Department
for Communities and Local Government. The problem with proposals
for making it automatic is that local authorities do not have
data on the size of business; they have data on the size of the
property. So, you could make it automatic for small properties.
That would, in effect, mean you also had automatic rate relief
for big multinational companies that have lots of small outlets—Sainsbury's
Local, Tesco Express and so on. Ideally, you need to differentiate
between helping small firms and helping small properties. There
is a scheme in Wales that is just targeting small properties.
In Scotland, they used to have it automatically, which helped
small properties. They have switched it back to being a scheme
you apply for as a small business. The system we have at the moment
is that you apply for it. You apply once every five years—it
is a one or two page form. We are working with CLG in each region
to make sure that local authorities do everything they can to
publicise it and make sure small firms take it up. What we are
continuing to look at is whether automaticity is a possibility.
There are significant hurdles to overcome to do that, which means
we need to raise the profile of the rate relief.
Q264 Mr Plaskitt: But you are
actively working on that option?
Adam Jackson: We are looking at
how it could be done.
Q265 Mr Plaskitt: On the empty
property relief bit of it, which has this £15,000 threshold,
we have had a lot of evidence—especially from manufacturing
companies—that that £15,000 rateable value threshold
is too low. A lot of manufacturing businesses have shut down quite
large units as they go through the recession, and they are simply
not getting the help. Representations are coming to us to have
that £15,000 threshold looked at again. Are you open to receiving
representations on that and passing them forward to colleagues?
Mr Austin: Yes, of course. Clearly,
when Ministers took this decision, there was a point at which
a line had to be drawn. That is where that decision was taken.
As in relation to all these things, I am very happy to make representations
on behalf of the region, of course.
Q266 Mr Plaskitt: Have you had
representations from business in our region about this already?
Mr Austin: No, I don't think so
particularly. I think that people accepted the decision that was
taken. A number of people in the business community welcomed the
relief, albeit limited, that was provided.
Q267 Mr Plaskitt: I know that,
but I am also hearing representations from larger manufacturing
companies that have been very heavily hit by the recession. They
are saying that it does not give them any help and that they are
certainly interested in having that threshold looked at again.
Mr Austin: As I said, I am very
happy to listen to what people say and pass their views on, of
course.
Q268 Mr Bailey: On Her Majesty's
Revenue and Customs and tax, in general, I think the business
representatives feel that the provisions made for flexibility
with tax in business have been very helpful indeed. I have had
some examples from individual companies where it has not been
perceived as such, but I do not expect you to answer on behalf
of those particular companies. From your perspective, first, do
you think that the provisions and the criteria on eligibility
for flexibility with tax payments are flexible enough? Secondly,
do you think any lessons can be learned from the schemes that
might be useful elsewhere?
Mr Austin: I think, again, that
this is an issue that was raised right at the outset when the
task force was established. We took up the matter on behalf of
businesses in the region. It is another example of where Ministers
have listened to the concerns of businesses and have acted. I
am sorry to hear that there are cases in which you think people
have not been treated flexibly enough. Where people have brought
individual companies to my attention—where MPs have approached
me about individual companies—we have talked to HMRC and
tried to get some of those things resolved. By in large, people
have welcomed the measures that have been introduced.
Trudi Elliot: If I could add,
when we had the last Regional Task Force, the Minister asked the
assembled business representatives what had been the most successful
initiative and their first response related to this. They felt
that we'd learned the lessons from the Rover task force, so HMRC
had been able to be very swift. We know that the number of agreements
that they've reached in the West Midlands is 13,350, which is
a significant sum.
Q269 Mr Bailey: If I can just
move on to another area, prompt payment is an issue. Obviously,
local authorities and other public bodies are major funders and
employers in the area. What assessment have you made so far in
terms of local authorities meeting the 10-day Government target
for payment?
Mr Austin: The Government announcement
was for central Government Departments and RDAs initially, wasn't
it? We issued a challenge in the region to local authorities,
health service organisations, universities and colleges. We've
written to all those organisations and we've asked them to sign
up to the pledge. We've publicised those that have agreed to do
that and, obviously, by omission, those that haven't as well.
That is available on the website that we launched through AWM.
Trudi Elliot: We have 44 organisations
that have signed up so far. Specifically in relation to local
authorities, quite a lot of complex process changes have been
required to speed up their payments. Local authority chief executives
in the region are preparing a paper for the Regional Minister
about some of the innovation that they have brought in to speed
up payments. It is fair to say from our meetings with businesses
organisations now that we are getting very positive feedback in
relation to the impact that that has had on public sector payment—even
where it has not reached 10 days, there have been significant
improvements. The areas where they would like future focus to
be include private sector payment, where, in some cases, things
have gone the other way. Local authorities and other partners
are also looking very much at how they can push the obligation
down their supply chain.
Adam Jackson: Can I just add from
the national perspective that the West Midlands is an exemplar
in this area? Ian's 10-day pledge—the work that we've done
on getting local authorities and NHS trusts signed up—is
something that we are taking as a model to other regions to show
how it's done.
Richard Burden: Minister, you made a
number of references to the task force, and we will want to come
back to that because it is crucial. Before we come on to the task
force and partnership working, however, we would like to pursue
a few more issues that are current in the West Midlands. First,
there are the issues around infrastructure.
Q270 Joan Walley: As you know,
we have taken evidence across the region. In doing so, we heard
evidence from Staffordshire county council and others in north
Staffordshire. I am talking not about AWM's infrastructure projects,
but Government infrastructure projects and the way in which the
Chancellor brought forward spending on schools—interestingly,
Stoke-on-Trent city council did not take that up, but Staffordshire
county council did. The evidence that was given to us, including
from the British Ceramic Confederation, centred on the importance
of accelerating these infrastructure projects and moving them
forward really quickly to create the jobs and so forth. How well
do you think the task force has identified the strategically important
infrastructure projects? How much has it helped to facilitate
them? There is a capacity issue in some ways. Is it a role of
the task force to accelerate this spending that has been brought
forward to maintain jobs in the region?
Mr Austin: On things like school-building
programmes, I am sorry Stoke is not taking this up and that some
of the local authorities in the region didn't do so either. I
want to see every local authority taking advantage of these schemes
and investing as much as possible in school-building programmes,
if they are able to do so. But that is a direct relationship between
the Government and the individual local education authority, and
although we can encourage, exhort and all that—just as local
MPs do and I am sure you did in Stoke—that is not something
that we can really take that sort of direct decision on. There
are areas where we can point to successes in infrastructure. In
Coventry, for example, we have been able to unlock substantial
amounts of investment in new housing schemes, which has accelerated
infrastructure projects and kept people in employment. In north
Solihull, we have been able to do the same. On the regional funding
advice process, we have been able to bring together partners in
the region to agree the region's priorities for investment.
Q271 Joan Walley: Has the Regional
Task Force identified capital investments of strategic importance
to the region?
Trudi Elliot: One of the work
strands of the task force is an infrastructure work strand that
the Government office is leading on on behalf of the region, and
we have done a number of things. At the moment, infrastructure
projects are particularly challenged by combinations of the effect
of land values and the stacking-up of multi-funded projects. There
are a number of strands to the work—and I do not want to
go over ground that AWM identified—but we cannot overestimate
the significance of the region identifying the 22 strategic investment
locations, most of which are multi-funded projects, that it is
going to focus on. We have also done an assessment across the
piece of other critical infrastructure projects in which there
may or may not be blockages. In a number of them there have not
been, but we hae identified those in which there is a challenge.
I shall give you the three first projects that Ian identified
as ones where he could perhaps take action to unblock them. There
is the North Solihull project, which is a major multi-agency development,
including a new school and new housing. Ian worked with partners
in that sub-region to unblock that project and get it back on
track. You know very well the situation with the Stoke infrastructure
project. It required some really innovative short-term activity,
and I would like to praise AWM in particular for stepping in at
one point to save that project, in terms of making funding available.
It is now back on track. Ian has already talked about the New
Deal for Communities housing transformation. What we have to do
is keep track of all those key infrastructure projects. Ian has
regular meetings with what he calls his "top eight":
the lead officers of each of the major funders in the region,
including in the area of health. What he has asked each of them
is that they make sure that they bring to the table any project
in which one element or aspect of the funding is under threat.
He can therefore attempt with colleagues to unblock it. We are
going to have to keep a very close eye on a lot of infrastructure
projects as we go forward, because the equations on which many
of them were based are having to be reworked.
Q272 Joan Walley: In its evidence
to us, Staffordshire county council talked about the time it takes
to assemble land, and get the planning consents and all these
things, and suggested that that needed to be kept very much in
sharp focus, because otherwise the capacity to deliver would shift.
I would have thought that the Regional Task Force would have wanted
to keep the oversight, to make sure that that slippage did not
happen.
Mr Austin: This is a good point,
isn't it? That is why, thinking about the most recent announcement
on Friday of the LSC college projects—I know that you are
disappointed about the situation in Stoke—
Joan Walley: Very disappointed.
Mr Austin: Okay, but I think that
taking a regional perspective, it would be churlish not to recognise
that to get two colleges out of 13 in the West Midlands through
this process is a massive achievement. That is a big achievement
for our region, and it is something that we should all be—look,
I wish that we had got Stoke college too, but the fact is that
we got two colleges through the process. Both of them are ready
to go immediately: land assembled, planning permission in place
and all the rest of it all sorted out. If we had not been in a
position through the task force, the top eight and all the other
links that we have been able to develop—if we had not got
AWM, the Learning and Skills Council, the local authorities, the
MPs and everybody working together effectively on the projects
to ensure that everything was in place—we would not have
got those two either. That is an example of how we have been able
to pull the whole region together and achieve something that I
think is really significant.
Q273 Joan Walley: By way of reply,
the issue is about the capacity to deliver and the criteria of
the new Department. I would be interested to know how the BIS
Department assesses the criteria. As I understood them in relation
to Building Colleges for the Future, the criteria concerned being
able to complete the work within the scheduled time frame and
spend the money within that time. In the case of Stoke on Trent
College, for example, it has been maintained that that ability
was there, yet that was not included in the criteria that went
forward. My general point about the region is that the professional
capacity needs to be there, or the areas with the highest needs
and deprivation will lose out.
Mr Austin: I would like to see
every college that needs investment having lots of money spent
on it, but the fact is that there is a limited amount of money
and an independent process to assess the bids. We have two out
of just a dozen or so nationally. That is a massive achievement
for the region, and we have managed to do it only by getting the
whole region working together. Of course I understand your disappointment
about Stoke, but getting Sandwell and Bournville colleges through
is a significant step forward.
Q274 Joan Walley: The point that
I am making concerns the ability of the task force to nurture
and bring forward such schemes. To move on to another aspect,
today was the successful jobseekers launch, which was constructive
and good. Do you think that the Regional Task Force needs to be
doing a similar co-ordinating role in respect of the Government's
commitment to new environmental technologies? For every single
infrastructure project brought forward, there could be a test—a
little box to tick, or whatever—that says, "Does it
pass the green new deal job criteria?" How can the Regional
Task Force ensure that infrastructure-building will be totally
committed to green environmental technologies?
Trudi Elliot: We need to be careful
not to invest the task force with responsibility for absolutely
everything in the region. The task force was set up to deal with
the region's response to the immediate challenges of the economic
downturn. What we have got to do is, at the same time, to focus
on what the region needs to do in the longer term. You heard clearly
from AWM. It led, but the region has backed, the regional economic
strategy, which absolutely highlights the importance of green
technologies. There are whole strands of work going on across
the region that are outside the direct ambit of the task force
but which are working towards the delivery of higher sustainability.
The take-up rate across local authorities in their local area
agreements of all those indicators around climate change was very
encouraging. If you do not have the data, we can provide you with
them afterwards. We cannot expect the task force to drive all
those issues.
Q275 Joan Walley: I accept that,
but in relation to the Government office and the local area performance
targets that each local authority across the West Midlands will
be adopting, should not more be done to ensure that they take
on board the zero-carbon commitment? Otherwise, by using public
money that is being released from the Treasury or BERR or through
other capital projects, we will be investing in public infrastructure
that will not be fit for purpose.
Trudi Elliot: There are two areas
where we as a region have said that we want to ensure that we
use the capital infrastructure to deliver other agendas—the
green agenda and economic inclusion—so that when we invest
in capital investments, particularly public capital investments,
we use them to drive up the skills level and bring into the work
force those who might not have been in the work force before.
The region is absolutely committed to using its capital infrastructure
for those two purposes. That pre-dated the task force and it has
got no less emphasis since we have had the task force.
Q276 Joan Walley: Do you audit that?
Is that demonstrably audited?
Trudi Elliot: There are other
mechanisms by which the greenness and sustainability of projects
are audited, not by the task force.
Ian Austin: There is a key issue
for the Homes and Communities Agency on the investment it is delivering
in housing in the region. It is generally developed to higher
environmental standards.
Q277 Joan Walley: Moving on very
quickly to Train to Gain, I think a lot of people were very encouraged
by the flexibility which as Regional Minister you were able to
bring to the 16-hour rule. In the evidence that we have received
in this inquiry, a number of employers have said to us that Train
to Gain could do with similar flexibilities being introduced in
terms of who can benefit from the qualifications, how people could
go on and get training beyond, for example, NVQ level 2, so that
that could all help with the retention of trained staff. Is that
something which you as Regional Minister or the task force have
received representations on? Is there scope for even more flexibility
in respect of Train to Gain?
Ian Austin: Yes, by all means.
I think the flexibilities that were introduced initially have
had a big impact, as you say, enabling people who have been trained
to level 2 to train to level 2 in other areas. But if there are
specific proposals that you have got or that businesses have made,
I will be very happy to listen to them.
Q278 Chairman: How prevalent and
extensive do you think short-time working is in the region at
the moment?
Ian Austin: There are lots of
companies in manufacturing, particularly in the automotive sector,
that have people on short time. It is certainly an issue.
Q279 Chairman: This is an issue that
has been bouncing around the regional media for some time, and
we have had formal and informal evidence about it. In other European
countries, including France and Germany, there are subsidies for
short-time working, but in the UK, Wales has brought in its own
short-time working scheme. Is this something that from your perspective
could be of assistance in the West Midlands, particularly in relation
to some of the pressures that manufacturing has been facing? If
Wales can do it, why can't we?
Ian Austin: As you say, there
has been support for short-time working in the region. I think
it is fair to say that the region put its case to the Government.
These are finely balanced decisions. You talked about other European
countries. I think that the Government have concerns about the
costs and breadth of those schemes, how they would be applied
and whether companies might take decisions that they might not
otherwise have taken to get support. I think there were concerns
about how difficult and expensive it would be to get such schemes
up and running. It is true that similar schemes have been in operation
in other European countries, principally in Germany. But the Germans
have had a scheme to cover short-time working for decades in the
construction sector to get the construction industry through the
winter. They have had a scheme that they can sort of take off
the shelf, that is already there, and apply it to automotives.
But in Germany, they pay out social security benefits at a much
higher percentage of previous pay, which means there is potentially
a much smaller cost to bridge if you are compensating people.
What we've got in the UK that the Germans don't have is a very
responsive tax credit system, which is paying out to 350,000 more
families this year than was the case last year and which responds
to rises and falls in people's income very effectively. Train
to Gain, which has just been mentioned, enables companies with
fewer than 50 workers to get compensation for wages, so I think
there are other areas in which we have been able to compensate
firms in this position.
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