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Lord Rooker: I have read the brief a couple of times. I noted where the full stop occurred and wondered about it but neglected to inquire about the gap in the sentence. As I say, the measure that we are discussing is not a new process. The "dual-key" mechanism is designed to win acceptance for small businesses. That is important. The "dual-key" approach has given great reassurance to many involved in the consultation process. The removal of the second condition involving rateable values, while being easier to administer, would not be favourably received by large business interests—interests that are crucial to the success of a BID.

A turnout threshold simply makes it more difficult for the BID proposal to meet with overall approval. It does not safeguard the interests of different business groups. It also goes against the democratic principle that people should be given the right to vote, not be compelled to do so by a threshold.

Amendment No. 123 suggests that if property owners were included in the mandatory BID levy, they should be able to vote in the BID ballot. The vote of a property owner would be in proportion to the financial contribution that he makes. For example, should the owner be required by the BID arrangements to pay 80 per cent of the BID levy, his vote will count as 80 per cent of the rateable value of his property in the BID ballot. Once again, this would confer a huge administrative burden for the local authority conducting the ballot and over-complicates an already technical voting system.

Amendment No. 124 relates to the power of veto. Clause 53 gives a billing authority the power to veto a business improvement district under circumstances that the Secretary of State may prescribe. Amendment No. 124 seeks to define those circumstances and states that the billing authority must have regard to the interests of property owners and the manner in which they are contributing to the BID levy when deciding whether or not to exercise the veto.

Amendment No. 124 makes billing authorities a watchdog for BIDs that may have compromised the interests of property owners because they may have been included in the mandatory levy. This not only places yet another burden on the billing authority's time and resources but is also against the spirit of business improvement districts.

BIDs aim to foster partnership working between local authorities and other local stakeholders. If the local authority is responsible for scrutinising the BID proposals in detail before it allows a BID to go ahead, the partnership will be unbalanced and the voting mechanism will be undermined.

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Amendment No. 124 also implies that the primary focus of the billing authority in deciding whether or not to exercise its veto is the interests of property owners. In fact the primary use of the local authorities' veto should be to safeguard the interests of the whole community, in particular the residential population and anyone who is not fully represented on the BID board. It would be inappropriate for the local authority to place the interests of property owners or ratepayers higher than those of local residents or other interested groups when deciding whether or not to exercise its veto.

Amendment No. 132, which comprises a new clause, sets out that a property owner cannot pass on the liability for his BID levy to his tenant or leaseholder unless a new lease is negotiated during the life of the BID, or a new tenant or leaseholder moves into the premises. In those circumstances, the contract drawn up between the landlord and the tenant would specify who would pay the BID levy. This new clause would allow landlords to pass on their contribution to the BID to their tenants whenever a lease comes up for renewal. It also fails to prevent landlords from passing on the cost of the BID levy to their tenants by raising rents or through any other mechanism. This is not sufficient safeguard for ratepayers and it does not solve any of the fundamental administrative problems with including property owners in the mandatory BID levy.

I hope that all the arguments and reasons that I have given are practical; none of them is ideological or politically inspired. We welcome the eagerness of property owners to become involved with BIDs—I make that absolutely clear—and we strongly believe that the framework set out in the Bill will be sufficient to engage and maintain that interest.

However, having listened to the concerns of the property industry, we shall review business improvement districts once there is a sufficient number up and running to make sure that property owners are properly engaged in the process. If we find significant cause for concern, we shall look again at the BIDs mechanism to see whether changes need to be made. That is not a throw-away afterthought; it is part of our considered response.

I hope that my comments have satisfied my noble friend Lord Graham. I meant what I said about there being no ping-pong. Nick Raynsford will write to the British Property Federation following the meeting which I believe took place on 2 June in a spirit of constructive engagement and partnership. We want BIDs to work; there is no question of that. However, there are some real practical problems with regard to property owners. We might have—this may negate slightly what I have said—a political reason not to want to introduce a new tax. The Treasury may say, "No new taxes". But even if we were to go down that route, the practical problems would be massive.

We should bear in mind how far we have progressed in regard to BIDs, and that the relevant information is already available on local authority computers. They know who to bill for non-domestic rates as they have

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the names and addresses of occupiers and know the relevant rateable values. However, we have no information whatsoever on owners. I am not saying that that information would be impossible to find but one would have to put together a register of property owners and set up a billing system, which would have to include sanctions for non-payment. We already have all that, of course, as regards non-domestic ratepayers—the people who pay what I still refer to as the council tax for business ratepayers. That system is tried and tested after having been in operation for many years since the introduction of the infamous poll tax legislation. No one argues that that system does not work.

We can, therefore, get cracking as regards BIDs. I do not carry in my head the proposed timetable but there is nothing to stop us getting cracking on BIDs. The good will is there as is the ability for property owners to pay voluntary contributions and our willingness—pressure, if you like—to get them involved on a voluntary basis, albeit without the relevant vote. We want to get them set up in areas where people want to go ahead. There is no barrier to that in terms of time. If we wanted to introduce a new tax, that would introduce enormous delay. But we do not have a tax on property in this country. The matter goes well beyond the BID areas and property owners. Such a tax would be an innovative process which I do not think at the moment the Treasury and the Government are minded to introduce. As I say, it would be impractical in any event.

I do not seek to avoid the tax issue but the tax is already payable. We are introducing it as a top-up on the existing tax. We have an existing system with a database but we do not have the relevant information on property owners. Therefore, it would be a brand new tax in that respect. As I said, if there is significant cause for concern, having reviewed BIDs when a sufficient number is up and running, we shall be prepared to see whether we can change the mechanism to meet that concern. I hope that with that explanation Members of the Committee will reflect on it and withdraw the amendments. Members of the Committee are free to return to the issue on Report and at Third Reading when I hope to provide much more precise arguments. As I say, my points are essentially of a practical nature. There is nothing ideological here.

I refer to the way in which the noble Lord, Lord Jenkin, introduced the amendments. So far as I am aware I have not said anything that Nick Raynsford did not say in another place. Therefore, my comments should not be news to those who promoted the amendments that we are discussing. It is unusual for Ministers to be faced with lines of people queuing up to pay a new tax. We are not used to that. I am not saying that we would not embrace it but it would be novel. "Tories for new taxes" is a new slogan. I am sorry, I should not have said that. It just popped out. That has introduced a wholly negative note when I am

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trying to appeal to the good will of noble Lords. I deserve a slap on the wrist for that. I had not written it down anywhere.

This is an unusual situation. But it underlines the importance that property owners put on this. I understand that. They say they want to be part of the mandatory system. I understand that. I am not criticising them. The good will that they have shown has been very positive and we welcome that. A sign of that good will is that they want to be part of the process of paying what would be a new tax. I am saying that it is impractical to do that even if we were in the business of introducing a new tax on property, which in this Bill we are not.

4.45 p.m.

Baroness Hanham: My noble friend Lord Jenkin and I do not want to comment further on the substantive part of these amendments. However, I want to ask a couple of questions on the amendments in my name, regarding the voting, those who have a right to vote and the percentage of votes. We have tangled before with the argument about the number of people who should vote on anything to demonstrate their full support for it. This is perhaps another example, like the referendum for regional assemblies. This has a very direct relationship with money raising. This is voting for Christmas. It is a new tax on occupiers of businesses. Therefore it seems to us that a higher test is required than perhaps is normal.

I want to comment on the test. By the time I had worked out the A plus B over C minus D and multiplied by " I had given up. It became apparent to me that this will not work—the Minister described that very effectively—unless there is a majority of the rateable values in favour. While I was listening to the Minister's inspiring words I was thinking about that. One could find an area—there are plenty around, such as town centres—where there is a very large supermarket, a very large chemist shop, a very large department store, a very small jewellery shop, some very small butchers' shops and a very small vegetable shop. There will be others round and about, but in that case the rateable values of the three or four major stores in the area could completely swamp the small businesses. To the three or four major stores it may be of enormous benefit for a BID programme to be carried out, but for the very small shops it may not be at all beneficial. They will be completely swamped. I am trying to remember my thesis. It could be that the small shops could be completely overwhelmed. Is that right?

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