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Lord Rooker: The amendment would diminish some rights also. We can appreciate that some tenants of fully mutual housing associations might well be prepared to give up the attraction of being a member of a co-operative for the benefits of a secure tenancy, but I doubt very much whether secure tenants would be prepared to enter into such an exchange, if it meant relinquishing their security of tenure and the possibility of right to buy. We do not think that the amendment is necessary. It seems reasonable to allow secure tenants of local authorities to exchange with assured tenants of housing associations because the tenancy rights are similar, but it does not make sense to provide a corresponding statutory right for secure tenants to exchange with tenants of a fully mutual housing association, where there is a big disparity between the tenants.

There is another point, which I do not present as a major problem—I think that I have it right. The amendment would also mean that tenants of co-operative housing associations, who might well be perfectly housed, would be enabled to jump the queue and gain allocation of a secure tenancy, in front of others who might be in much greater housing need or who have waited considerably longer.

We are not sure whether the proposal is in the best interests of housing co-operatives, since it would encourage existing tenants to assign their tenancies to secure tenants who might not support the aims of the co-operative. Many years ago I was in a co-operative that freely agreed to split up. We may be able to come back to the matter on Report; we do not think that it is necessary, but we certainly could not accept the amendment as drafted by my noble friend.

Lord Graham of Edmonton: I am grateful to the Minister. He is right to say that nothing is clear-cut. I would have thought that the individuals involved, if they are sensible and reasonable, would look at the kind of problems that the Minister has raised before entering the agreement. If they are willing partners in an agreement and an exchange, so be it. The Minister has highlighted some of the practical problems that may arise. He has left me to think and, if necessary, to consult, before coming back at a later stage. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 156 agreed to.

Clauses 168 to 170 agreed to.
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Lord Rooker: My Lords, I beg to move that the House do now resume. In moving this Motion, perhaps I may suggest that Committee stage begin again not before 2.35 p.m.

Moved accordingly, and, on Question, Motion agreed to.

House resumed.

Business Improvement Districts (England) Regulations 2004

Lord Rooker rose to move, That the draft regulations laid before the House on 7 September be approved [27th Report from the Joint Committee].

The noble Lord said: My Lords, I commend to the House the Business Improvement Districts (England) Regulations 2004 under Section 150 of the Local Government and Housing Act 1989 and under Part 4 of the Local Government Act 2003, which we debated at considerable length last year—it is a really exciting Act.

The sections and regulations provide for the setting up and operation of business improvement districts—or BIDs, as they are now widely known. Under the scheme, local authorities and businesses would be encouraged to work together for the benefit of their local community. Projects under the scheme could include a wide range of different measures for improving the places where people work and live. That might involve increasing security, cleanliness, improving public access and the street environment, or enhancing or promoting the town centre or business area in some other way. The improvements would be funded by a levy raised on the non-domestic ratepayers or a defined class of ratepayers in the area covered by the scheme.

However, before any proposal goes ahead, the businesses concerned would have the opportunity to vote in a ballot. To go ahead, schemes must be supported by more than 50 per cent of the local businesses balloted, both in terms of total numbers and of rateable value. That double requirement protects the interests of both small and large businesses in the area. There has been widespread interest in the scheme and enthusiasm for the opportunities it offers. A lot of energy and commitment have gone into ensuring that the bids are a success.

Pilots have been set up to develop proposals to the point of being ready to go to a ballot. The pilots are of different sizes and types, and in many different locations around the country. They have shown the great potential of the scheme to improve the local business environment. I would like to take the opportunity to thank the Association of Town Centre Management for establishing 22 pilot schemes across the country; the Circle Initiative, for piloting the concept in five areas of central London; and the partners in the other independent schemes who have
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taken forward ideas to transform their own areas, including those involved in the Kingston project, which may be one of the first to go to ballot.

There have been concerns that the scheme has taken a long time to come into effect and that we are in danger of losing momentum. Although the level of enthusiasm and energy generated by the proposed scheme has been very encouraging, it would dissipate if the mechanism for putting it into effect were flawed and therefore we have taken time to consult fully on the proposals in the regulations to ensure that they are workable, practical and robust. Some issues have proved more complex than originally anticipated. Most pilot schemes have not yet reached the ballot stage and those that are ready will not have to wait much longer. I understand their frustration, but it is in the long-term interest to get it right.

During the debates on the Local Government Act 2003, we discussed at length the issue of whether property owners as well as occupiers should be entitled to vote. I do not intend to revisit that issue here. There is nothing to prevent property owners making voluntary contributions, which we would encourage. We have also undertaken to conduct research into the role of property owners in business improvement districts, and we hope to have appointed a research body to take that forward by the end of next month.

There have also been concerns about the level of information on the proposals provided at the ballot stage to those businesses entitled to vote. Anyone liable for a BID levy is entitled to receive a copy of the BID proposal and the proposed business plan, if they ask for a copy. There is a specific provision in the regulations for that. At the heart of the scheme is a partnership approach. We expect discussion and consultation among businesses in the area to take place at a very early stage in the development of the proposals, and that those discussions will continue over time, so the details should be familiar.

If some businesses feel that there has been a material irregularity in the ballot, they can ask the Secretary of State to declare the ballot void or order a re-ballot. If businesses or the big proposers feel that the billing authority is acting unreasonably in vetoing the proposal, they can appeal against the veto. The appeal would take account of the billing authority's published policies and whether proper consultation took place before the proposal was put forward to the ballot.

Overall the scheme offers an opportunity for business and local government to work together for improvements in their joint interests. Those benefits are additional to what either local government or local business can provide individually. The regulations are fair, clear and contain the right checks and balances while encouraging innovation and productive local partnerships. It is a big incentive for people to work together. I beg to move.

Moved, That the draft regulations laid before the House on 7 September be approved [27th Report from the Joint Committee].—(Lord Rooker.)
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Baroness Hanham: My Lords, as the Minister said, we spent a considerable amount of time discussing this last year. We were not always entirely in agreement at the end of those discussions. I think we had hoped that by the time we reached this stage, everything would have been sorted out. However, I am sorry to say that we do not think that the regulations are drafted adequately.

The current drafting leaves individual BID bodies the responsibility of setting up schemes to deal with, in any BID levy arrangements, inter alia new hereditaments, split or merged hereditaments, deletions from the rating list, exemptions and properties treated as part-domestic. Failure to deal with these matters properly in BID arrangements could make it impossible for billing authorities to collect BID levies, and it is likely to create a series of significant legal disputes. Will the Minister indicate what was the thinking that ignored these aspects?

Our understanding is that the lack of specification of these issues within the regulations will also result in BID arrangements varying widely throughout the country. We understand the intent is to allow maximum flexibility for BIDs to operate in the most suitable way, but this will make it difficult for multiple property occupiers to respond to BID proposals, as each BID arrangement will be different. Further consideration ought to be given to the means by which BID levy can deal with other technical issues.

The regulations do not prohibit any extension to the duration of the BID, any fundamental alteration to the scope of works or services, or any alteration to the identity of the service provider, without an alteration ballot. This seems unduly complicated, and the Minister might like to comment on it.

The BIDs guidance correctly highlights a number of advantages of incorporation for BIDs. Where incorporation is not adopted as the chosen legal status of the BID, then it will be essential to define clear financial accountability and reporting procedures in order to ensure and maintain partnership confidence in the financial soundness of the BID.

BID proposers can include property owners. There is an anomaly here, in that owners who are not in occupation will not contribute to the BID levy other than in respect of vacant properties. Property owners may, therefore, attempt to use the role of BID proposers to enable them to improve the value of their properties without making any financial contribution. We touched on that when we debated this issue before.

The question of ballot costs could be crucial to the initiation of BID projects. BID proposers will be expected to show evidence that they can cover the cost of a ballot, though if successful they will be entitled to recoup the cost of the ballot from the ratepayers. Though the legislation does not specify that BID proposers necessarily pay the costs of the ballot if unsuccessful, they are obliged to demonstrate sufficient funds for this eventuality. This will be a substantial requirement and it should act as a deterrent to unfeasible BID proposals. None the less, there remains some concern that such BID proposals could be promoted and therefore the
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additional penalty of a threshold of support for a BID below which proponents would be required to pay the costs of a ballot could be deemed appropriate by certain billing authorities.

We understand that the Government will be monitoring the operation of BIDS, and it may be that they will give further consideration to requiring evidence of written support for BID proposals from local ratepayers before a billing authority is obliged to proceed with ballot arrangements. Can the Minister confirm whether this is indeed the case?

The definition of persons entitled to fund the BID ballot is imprecise and unclear in the regulations. In the case of limited companies, there needs to be some definition as to those persons entitled to approve funding as ratepayers in a BID ballot.

Finally, the availability of information ought to be closely monitored and policed by the relevant billing authority to ensure that information is used only for the purposes of establishing and voting on a BID project. We suggest that billing authorities should also be required to provide the rating list descriptions for properties that fall within the geographic area of the proposed BID. In many BID areas, it might not be the intention to charge every ratepayer but only certain categories of them—for example, retailers or office occupiers. These descriptions may be a helpful starting point in seeking to identify relevant properties.

I realise that we are at the regulation stage, but these seem to us areas of omission. If the Minister can respond to them, we can have the matter on the record before the regulations are introduced.

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