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Lord Jenkin of Roding: I am very grateful for the Minister's remarks. The growing use of service level agreements is one way in which it is becoming easier to measure the given level of service, particularly as increasing numbers of services are provided under such agreements with private contractors.

As regards capital, that is an issue we still wish to consider. My noble friend rightly said that it could be a considerable advantage to ratepayers in a particular area that a much-needed capital improvement, perhaps embodying a traffic scheme or something of that sort, could be advanced and brought into operation earlier than it would have been possible for the local authority to achieve under its capital programme.

So it is clearly envisaged that there could be one-off capital schemes of that kind as part of the BID. Similarly, as regards the addition of amenities--whether tree planting, providing tubs or whatever--that could be advanced and brought in earlier. That would be an undoubted improvement. It is not just relieving the local authority of expenditure. The scheme will have to ensure that the local authority is involved and makes an appropriate contribution. The Bill makes provision for that, and is strengthened by some of the amendments already passed. Everybody agrees with the principle; we simply have to find the best way of doing it.

Baroness Hamwee: This has been an interesting exchange and we shall take these matters further. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 22 and 23 not moved.]

27 Feb 1998 : Column 903

1 p.m.

Lord Jenkin of Roding moved Amendment No. 24:

Page 5, line 18, at end insert--
("( ) Subsection (1) does not apply in relation to such provision as would otherwise be made by a local authority in the discharge of their functions which is, pursuant to an order made under section 70 of the Deregulation and Contracting Out Act 1994 (functions of local authorities) made through the exercise of those functions by a BID company authorised by the local authority in that behalf.").

The noble Lord said: This amendment is intended to deal with a situation where a local authority and a BID company agree that the company should undertake specified functions on behalf of the local authority. I referred to this in a debate on an earlier amendment. It can be achieved by making an order under Section 70 of the Deregulation and Contracting Out Act 1994. I said that it would be silly to have two cleaning companies charging round the streets and that the local authority should be able to delegate that function to a BID. On the Park Royal Estate, to which I referred earlier, there is already considerable evidence that the local authorities would be happy to contract with the new BID company for quite a lot of the services on the estate. There are no council tax payers on that estate. It comprises entirely commercial ratepayers. This seems a sensible way of developing and improving the services for the benefit of the occupiers. This amendment is intended to make that possible. I beg to move.

Baroness Farrington of Ribbleton: I note this new provision which helpfully distinguishes when a BID scheme is acting on behalf of a local authority and when it is acting on its own account. In this way, it would avoid Clause 9 having the, I am sure, unintended effect of overburdening local authorities in circumstances where activities had been contracted out following an order made under the Deregulation and Contracting Out Act.

Lord Jenkin of Roding: I commend the amendment to the Committee.

On Question, amendment agreed to.

Clause 9, as amended, agreed to.

Clause 10 agreed to.

Clause 11 [Formation and functions of BID company]:

Lord Jenkin of Roding had given notice of his intention to move Amendment No. 25:

Page 5, line 35, at end insert--
("( ) No BID company shall be constituted so as to be a company to which the provisions of Part V of the Local Government and Housing Act 1989 (companies in which local authorities have interests) apply, by reason of being a company under the control of, or subject to the influence of, a local authority within the meaning of that Part.").

The noble Lord said: This amendment was drafted before we had the introductory remarks made by the Minister at the beginning of this Committee stage. The amendment as drafted was designed to ensure that the expenditure of a BID is not imputed to the local authority. That would arise if the BID company were construed so as to fall within Part V of the Local

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Government Housing Act 1989. That would clearly be a substantial constraint and a disincentive to setting up a BID. The consequence of the amendment would be that local authority participation in a BID and in the company would be limited. However, it does not preclude the involvement of local authorities and existing partnership arrangements under, for instance, town centre management schemes which often mirror the minority interest which is required to avoid the operation of Part V.

However, I think that we shall need to reconsider the provisions in the light of the advice that the Minister has clearly received from her officials and no doubt from other departments, including the Treasury. We shall have to explore the best way of making sure that that advice is correct. I am apprehensive that if that view is upheld we shall find ourselves in some difficulty. It may well be that the provision would become inappropriate in those circumstances. It is intended to deal with a particular problem. I would be happy to know whether, in the light of the circumstances which the noble Baroness has disclosed today, it would still be appropriate to go ahead with this amendment.

Baroness Farrington of Ribbleton: I apologise if the timing of the views expressed at the opening of this Committee stage has been inappropriate and thus unhelpful to the noble Lord. I offer him an opportunity to discuss the issue between now and Report stage. I note that this amendment is intended to ensure that the BID company will not be under the control of the local authority, and that the business community will be very much in the lead. This matches the aim of a BID, but perhaps the Committee might want to give some thought to the issue of accountability which was raised in the debate on Clause 1, and whether the clause would meet its aim at all times after the company has been launched.

Lord Jenkin of Roding: I am grateful for that. However, in the light of the anxieties that I expressed and what the Minister has said, I do not believe that it would be right to press the amendment, so I do not intend to move it.

[Amendment No. 25 not moved.]

Clause 11 agreed to.

Clauses 12 and 13 agreed to.

Lord Jenkin of Roding moved Amendment No. 26:

After Clause 13, insert the following new clause--


(".--(1) This subsection applies where--
(a) premises are let to a person ("the tenant") who by reason of his occupation of those premises is, or becomes liable to, a business improvement district charge; and
(b) that person alleges that, having regard to the nature of the improvements proposed by the business improvement district scheme to which the charge relates, the whole or part of the charge ought to be borne by the person from whom the premises are let ("the owner").
(2) Where subsection (1) applies--
(a) the tenant may, in the absence of agreement as to the part of the charge to be paid by the owner, apply to the county court, and the court, after hearing the parties and any

27 Feb 1998 : Column 905

witnesses they desire to call, may make such an order as the court considers just and equitable in the circumstances of the case, regard being had to the terms of any contract between the parties; or
(b) the court may, at the request of the owner or tenant, determine the lease.").

The noble Lord said: This new clause raises a point which has caused those who are advising me and myself considerable anxieties. It is not in doubt that we shall have to deal with the issue of people other than the occupier or the tenant of shop premises. There may be superior lessees and there will certainly be owners. If there is a short lease and there are to be significant improvements, much of the improvement will accrue to the benefit of the owners with regard to the value of their property, and it might be argued that the owners should therefore have to contribute by paying part of the charge. If it is a very long lease or if the improvements are relatively transitory, it may be that they will inure entirely to the benefit of the current occupiers, with very little impact on the value of the property.

It has become clear that there is a problem to be addressed. Discussions with bodies such as the British Retail Consortium, the British Property Federation and chambers of commerce have convinced us that that is the case. An amendment is clearly necessary because under the original Bill there was no provision for involving owners. We have already passed an amendment that owners will be entitled to make representations and will have to be consulted, and the local authority will have to take their views into account. The purpose of the amendment is to provide that, in the absence of agreement between the leaseholder (the occupier) and the freeholder, there is a procedure for application to the courts for a fair decision to take account of the respective interests and benefits. Essentially, we are seeking to provide such a mechanism.

Happily, there is a good statutory precedent because exactly the same situation arises under Section 170 of the Factories Act 1961 where a county court can apportion the cost of structural alterations between an owner and a tenant. The circumstances are different, but one can well imagine that the Factories Act might require structural changes that will enhance the value of a building and that the owner should pay part of that. Under that 1961 Act, where there is no agreement, a simple county court procedure is provided. That is the solution that we are proposing here.

That Act refers to the terms of a contract in deciding apportionment, but in their wisdom--I think it is entirely right--the courts have made it clear in case law that a court does not regard itself as bound by the terms of the tenancy alone. If it were so bound, the provision would be unnecessary and otiose. The courts have been able to resolve differences by taking account of all the circumstances and making a fair division. It may be suggested that recourse to the courts means that the problems of litigation and the costs involved are a considerable burden. However, one needs a fallback provision. It is envisaged that in most cases it would be perfectly possible to reach a solution. The knowledge that it would be open to one or other party to go to the courts would be a powerful incentive to agree.

27 Feb 1998 : Column 906

I believe that this offers a more satisfactory route than the one considered earlier which involved the deployment of a disregard in assessing rental values where improvements were effected by a BID scheme and paid for by tenants through BID charges. The disregard route might be taken by analogy to the Landlord and Tenant Act but, having considered the matter and discussed it at some length with the representative bodies involved, we believe that the precedent of the Factories Act 1961 offers a better procedure. I hope the Committee agrees that that is a reasonable solution to a very real problem. I beg to move.

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