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The noble Lord said: My Lords, in moving Amendment No. 19 I shall discuss Amendment No. 26. In Committee, specific reference was made by the noble Baroness to the relationship of BID charges to the local government finance system as a whole. As I and the noble Baroness have indicated, the matter is under review and we are expecting a consultation paper in due course. However, the amendments seek in part to clarify the basis of liability to a BID charge. Amendment No. 19 treats the liability of a person to a business improvement district charge in the same way as a liability to a local non-domestic rate. In other words, for a ratepayer in occupation of premises within a BID it provides for liability on a day-to-day basis, just as the ratepayer is liable for non-domestic rates. The consequence of the amendment is that liability to BID charges follows liability to non-domestic rates set out in Part III of the Local Government Finance Act 1988.
Amendment No. 26 changes the definition of "ratepayer" to refer to a person who is liable to a non-domestic rate. That more appropriately aligns the definition with the rating legislation and makes clear that it is liability to rather than payment of a rate to which liability to BID charges relates. I beg to move.
Baroness Farrington of Ribbleton: My Lords, I can appreciate what the noble Lord is trying to achieve with Amendment No. 19. The Bill envisages a close link between liability to the charge and liability to non-domestic rates. However, the present amendment seems to leave unanswered a number of issues upon which the noble Lord may wish to reflect. For example, he might want to consider how the Bill should address the effect of changes to hereditaments; what happens when a new hereditament comes into being; and the
Lord Jenkin of Roding: My Lords, as the Minister responds to many of the amendments, I at least recognise that if a Bill of this kind is to reach the statute book it will require the attention of parliamentary counsel and of the experts in the various departments concerned. That is normal procedure. The noble Baroness has made it abundantly clear on more than one occasion, both in public and private, that she does not expect this Bill to reach the statute book. In those circumstances, I entirely understand the reluctance of the Government to place parliamentary counsel at the disposal of myself and my supporters.
I take note of the point that she made and if at a later stage, or perhaps in future legislation, these points need to be dealt with they can be. In the meantime, I commend the amendment to the House.
On Question, amendment agreed to.
Lord Jenkin of Roding moved Amendment No. 20:
Page 6, line 20, at end insert--
("( ) The liability of a person from whom a business improvement district charge is demanded shall be assessed as though the charge were a non-domestic rate in respect of a hereditament shown on the non-domestic rating list in force at the time the demand is made.").
After Clause 13, insert the following new clause--
(".--(1) This section applies where 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.
(2) Where the tenant alleges that the level of rent which will become payable to the person from whom the premises are let ("the owner") on the grant of a further tenancy or on a review of an existing tenancy is attributable to the improvements provided for by the business improvement district scheme, the tenant may, in the absence of agreement with the owner as to the level of rent payable, apply to the county court.
(3) Where an application is made under subsection (2) above, the county court may, after hearing the parties and any witnesses they desire to call, and having regard to the terms of any contract between the parties and the length of time which the tenant has been liable to the BID charge, make such an order as it considers just and equitable in the circumstances of the case.
(4) Without prejudice to the generality of subsection (3) above, the court may make an order which provides--
(a) that the rent payable by the tenant shall not take account of any enhancement of value attributable to the improvements provided for by the business improvement district scheme; or
(b) that the whole or part of the charge shall be borne by the owner.").
The noble Lord said: My Lords, the amendment addresses an issue which was discussed at length in Committee when I tabled a new clause but withdrew it. The clause provides a mechanism by which landlords and tenants can resolve their differences through a mutual forum when the tenant takes the view that improvements result in an enhancement of the landlord's interests and the parties are unable to agree how to split the charge, or when the tenant takes the view that the landlord has profited unfairly from the improvements which have at least in part been paid for by the tenant through rent increases.
Whether that situation arises will depend on the nature of the improvements provided by the BID scheme. However, it may be that the tenant is put in a position where the establishment of a BID scheme to which he contributes results in a general improvement in the area and then the landlord seeks to enhance the rental at the next rent review or when a new lease is applied for. The amendment addresses that situation by allowing the tenant to apply to the county court, which is given a broad power to make an order which is just and equitable in the circumstances.
The court's attention is directed specifically by the clause to the possibility of disregard in relation to rent payable which is attributable to improvements made by the BID or a contribution by the landlord to the BID charge itself.
The House will note that a relevant feature in deciding whether the landlord should contribute is the length of time for which the tenant has been liable for the BID charge. This new clause as now drafted would not, for example, permit a new tenant simply to go off to the court and seek a contribution from the owner. The application will arise only at the next rent review or on the granting of a new lease when the length of time for which that tenant has been in occupation and paying bid charges will be considered.
I suggest that the use of a county court rather than arbitration to settle the issue is appropriate because the improvements provided under a BID are not restricted to the occupier who applies but are improvements affecting the area as a whole. The House will remember that the county court already has jurisdiction in relation to the granting of new leases in cases where the Landlord and Tenant Act 1954 applies, as it does to most commercial leases. Specific precedent for the use of the county court as a forum to deal with disputes over the level of contributions is provided by Section 170 of the Factories Act 1961, to which I referred in Committee.
Finally, one of the criticisms of the clause tabled in Committee related to the provision for the lease to be determined. I accepted those criticisms. I believe that the noble Baroness used the word "draconian" and we have abandoned that proposal because we do not wish to appear draconian. Therefore, that provision does not appear in this proposed new clause.
I believe that we have gone a long way towards meeting the criticisms which were addressed in relation to what is a real issue. We have provided a procedure whereby justice can be done between landlords and tenants where there is a BID. I beg to move.
Baroness Farrington of Ribbleton: My Lords, we welcome the efforts made by the noble Lord, Lord Jenkin of Roding, to address the question of providing equity between landlords and tenants as regards the financial contribution to the cost of BID schemes and the consequential effect of schemes on rental income and costs.
With regard to the specific amendment, we have a concern about the amount of litigation which may arise and the burden on the courts. The amendment contains
In addition to the very lengthy consultation which I know the noble Lord has already undertaken, he may find it helpful to seek the views of professional bodies such as the Royal Institution of Chartered Surveyors.
Lord Jenkin of Roding: My Lords, that is a very valuable suggestion. Of course we have been in contact with that profession. I thought that perhaps the precedents provided by the legislation which I mentioned--the Landlord and Tenant Act and the Factories Act--might have provided a suitable precedent. But of course that will be looked at if the Bill proceeds in another place. In the meantime, I believe that this proposal provides an appropriate procedure and I hope that the House may be able to accept the amendment. I commend it to the House.
On Question, amendment agreed to.
Clause 14 [Alteration of business improvement district charges]:
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