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However, this support does not come without some concerns about the Bill. No one welcomes additional burdens on business, particularly if we do not emerge from this recession as fast as the Chancellor, speaking in another place today, would hope. Nevertheless, it is incumbent on us to balance the cost-benefit analysis involved. In this context, I echo the key findings of the Greater London Authority, which supports the Bill, for the following reasons. The authority recognises the long-term benefits of Crossrail to business, which will far outweigh the costs to it of the BRS. As has been pointed out, all of London’s boroughs will benefit from Crossrail and there are important medium-term benefits which should create demand for up to 14,000 jobs during its construction. This will make it an important source of employment at a time when London’s job market is likely to remain difficult. The authority makes a further compelling point, which is that getting on with Crossrail’s construction sends an important signal to the world about the intention to continue to invest for the long term. Delay would reveal a lack of self-confidence in maintaining London’s status as a leading global city.

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That said, I share the views expressed by the noble Baroness, Lady Hamwee, who has deep-seated reservations about the fact that the detail of the Bill lies in secondary legislation in the form of regulations that have yet to be published and that a significant amount of that detail will focus on how the boroughs are to administer the new business rate. Perhaps the Minister will be able to provide greater clarity on when these documents will be made public, because, in the tempered words of London Councils, “This is not ideal”.

However, it will not surprise your Lordships to learn that my principal concern relates to sport and recreation, whose role I am pleased to see is recognised in Clause 13(4). In Canary Wharf today, the International Olympic Committee’s Co-ordination Commission met for the fourth time with the London Organising Committee of the Olympic Games; indeed, I have just returned from there. The Olympic Games and Paralympic Games bring more to a host city than a summer of glorious sport. They are a catalyst for the youth of this country, a catalyst for the elite sportsmen and sportswomen of future generations and a catalyst for a sports legacy that should reach every community in the land. I am therefore concerned about the effect that this could have on a unique entity—the Olympic Park following completion of the 2012 Games. The facilities there are a central part of the legacy that we are all working so hard to foster and it is important that we do not undermine the work that is being done to inspire a generation of young people to take up sport by increasing costs to the businesses and facilities covered by the authority of the proposed special purpose vehicle.

More generally, and in principle, although it would appear that sport has no problem with the Bill, a number of additional issues may have an effect on sport which I hope we will be able to consider in Committee. As noble Lords will be aware, under Clause 13(4) community amateur sports clubs—CASCs for short—would receive an exemption under the provisions of the Bill. While I welcome any measure that benefits CASCs and boosts the CASC scheme, I am concerned about those sports clubs that are not registered as CASCs and are not exempt by the de minimis threshold in the Bill, but which nevertheless provide a valuable service to local communities. It is important that their contribution is recognised in the tax system, particularly because last year the Government recognised the promotion of amateur sport as a charitable purpose. Let us not forget that the excellent work done by the Central Council of Physical Recreation in its 2007 sports club survey found that more than half of the UK’s amateur sports clubs were either operating at a deficit or only just breaking even. We must remain committed to easing the regulatory burden on them, not increasing it, and, if necessary, counteract the effects of this Bill by launching a parallel CASC registration initiative.

The negative impact that this measure could have on sports clubs would undermine the valuable role that they play in achieving government targets, not only in encouraging more people to be actively involved in sport and recreation but also more widely in improving public health and education, fostering community cohesion and tackling anti-social behaviour and social exclusion. To us in the British Olympic Association,

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who are working closely with the Central Council of Physical Recreation, which represents sport and recreational governing bodies the length and breadth of the country, the sports legacy for this country from the Olympic Games is as important as the regeneration legacy.

The challenges that we face have been clearly set out by the Fitness Industry Association, which, in its briefing to us today on these health issues, stated:

“A BRS, coupled with the expected rise in the Uniform Business Rate ... has the potential to inflict a significant and negative impact on public and private health and fitness facilities and to impede Government and community efforts to bring about a healthier, more active population. The Foresight Report”,

to which it refers,

As a result, there is understandable concern that some of the key businesses that offer the facilities needed to address these issues will face disproportionately high rate increases. It cannot be right to increase the tax burden on those organisations and businesses offering the facilities that are needed to address the challenge of delivering a sports legacy for the Games and for the country at large. It is my view that nothing should be done to jeopardise public health campaigns and overall health and sports objectives. That may lead me to introduce a “cardiovascular amendment” to the Bill to provide special BRS relief for public and private organisations that facilitate opportunities to be physically active.

In conclusion, I give my thanks to Ministers who have already provided some relief on the subject that I have been discussing through the community amateur sports clubs initiatives. I hope that we can, in considering the Bill, go significantly further. At this point in our journey, we have a long road to travel.

5.02 pm

Baroness Valentine: My Lords, I declare my interests in this debate. I am chief executive of a non-profit-making pressure group, London First, which, with subscriptions from businesses, universities and colleges, pursues its mission to make London the best city in the world in which to do business. I want to make it absolutely clear that I am not a paid advocate for any individual business and that my views are my own.

I share the ambitions of the Government’s Department for Business, Enterprise and Regulatory Reform in pursuing an environment in which business can thrive, only I do so with an insight into the immediate hopes, fears, opportunities and challenges facing business leaders. In regard to this Bill, I find myself in the unusual position of supporting higher taxes on both the property and the occupier community, because doing so ultimately promises them and society greater benefits.

I apologise for labouring both my interests and my perspective. I do so because this is the first time I have spoken on a Bill in the House since an Opposition spokesman from another place suggested that Members who draw on their professional expertise in this House

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might somehow be committing an offence. I am grateful that his more considered colleagues in this House have a better understanding of the value that temporal and spiritual experience bring to our proceedings. Now more than ever, this House and this Parliament need to understand how their decisions will impact on the economy and I hope to bring value to the House in this regard.

The Bill broadly enables local businesses and local government to come together to fund a central infrastructure for the benefit of all. Given the pressure on public spending for much of the next decade, a mechanism such as the supplementary business rate, empowering local authorities to raise money from businesses in order to invest in the infrastructure they say they need, is a good thing.

The question is: how is it to be done?

Infrastructure spend brings immediate activity and therefore jobs, as well as building capacity for the long term. This is surely welcome in an economic downturn and provides grist to the mill of Sir Rod Eddington’s report, which was categorical in making the case for infrastructure investment to support the economy. However, we must be conscious that the SBR is but one part of a number of rating challenges facing businesses at the worst possible time in the economic cycle.

As the noble Lord, Lord Bates, has described, when rates bills fall onto the desks of finance directors next April, an SBR levy might be accompanied by an uplift in rates and an absence of empty property rate relief, as well as—in London in particular—the sharp effects of revaluation due to the valuation having been taken in April 2008 at the peak of the market. It is a shame that the Chancellor has not taken the opportunity to reintroduce empty property rate relief, the logic for the removal of which has disappeared. However, the Government have indicated that transitional arrangements will be put in place for the revaluation. It is vital that these measures effectively alleviate the strain of the rates burden at this crunch time.

For London, the Bill will enable the current mayor to fulfil the commitment of his predecessor in providing part of London’s funding contribution for Crossrail. This is essential London infrastructure that will bring benefits to London and London businesses in excess of the costs, so I strongly support the Bill—though not without reservations.

I sympathise with the views of those who feel that there should have been a discrete bill for Crossrail’s funding or who feel that every project should require a ballot so that businesses can be confident that money raised will be appropriately invested, but we are where we are. We desperately need the capacity that Crossrail will provide, and, starting now, it will provide much needed countercyclical investment in London.

Nevertheless, as I have mentioned, it is clearly a difficult time to be increasing the financial burden on business. The SBR will be with us for many decades and many economic cycles. Anything that the Mayor of London can do to vary the quantity or the timing of the SBR on its introduction at this economically fragile time will be welcome, and I know that he is considering the extent of flexibility available to him.

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A further issue, which was touched on earlier, is the way in which the SBR affects businesses in business improvement districts, or BIDs, where occupiers already pay a levy to support local improvement measures. There is a strong case for some offset measure to ensure that businesses contributing to BIDs do not in effect pay double. In London, the mayor has resisted this step, but we have found common ground over reducing the impact by broadening the way that BIDs are funded. It has long been argued by London First, the British Property Federation and others that BIDs should have the power to decide whether or not to include property owners, as well as occupiers, as contributors to their funding. To date, many property owners have contributed voluntarily to BIDs, but other property owners who have not contributed have also benefited from their activities. The Bill represents an opportunity to rectify that imbalance and to help to reduce the immediate burden on occupiers. I hope that government amendments will be brought forward to that end, which will attract wide support.

It is always a thorny issue debating the finer points of legislation concerning the structure of taxation. As I mentioned in my opening remarks, I sympathise with a number of the critics of the form of the Bill but, as is so often the case, I fear that the perfect is the enemy of the good. Subject to the observations I have made, this Bill is the good.

5.08 pm

Lord Berkeley: My Lords, I welcome the Bill. I have been involved in Crossrail for a number of years, and the Bill is a way of plugging quite a big financial hole. I shall come back to that.

It is a good idea that the Bill is much wider than Crossrail alone. Having read Clause 3, I think it could be used for energy projects, be they wind farms, waste-generating stations or nasty coal-fired power stations—if anyone wanted to do that—or road, rail, airports or ports. As the noble Lord, Lord Bates, said, it could cover centres of excellence too, as well as my noble friend Lord Smith’s skill improvements scheme, so it is to be welcomed.

I still worry slightly about who pays and who decides. It will be important for businesses to be balloted. Taking into account the whole of the Greater London area, some businesses will think that it is a very good idea to have something while others will ask what good it does them. I will come back to that.

On a more general principle, in the past decade or two we have seen people who live where transport links have been suddenly improved, be they rail or road, enjoying pretty enormous capital gains on their properties. I know that it is politically unacceptable to change anything to do with domestic valuation or rates, but some businesses might ask why they should pay while residents do not.

It is good that small businesses will be exempt. I do not have much of a view on the 2p maximum, except when we look at the example of Crossrail. As many noble Lords have said, it is an essential element of the project funding. It is under the 30 per cent but it is still quite high. If a project such as Crossrail is being promoted through a hybrid Bill, the Standing Orders

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say that a financing plan which is credible or definite has to be in place before the Bill even starts its passage through either House. Some of us might have questioned whether that was the case regarding the BRS. Even though it may have been in the plan, there was no legislation at the time to allow it to be raised.

However, the Crossrail Bill received Royal Assent and we are all wondering what will happen next. Clearly this will plug the gap. Whether it is essential to the funding of Crossrail, we can debate. The Treasury could always find more money if it wanted to, even now, or it could ask local business ratepayers to do it instead. This is what is in the plan and I shall not question it very much.

What worries me comes out of the briefing from Transport for London and the Mayor of London about the economic benefits of Crossrail, which many noble Lords have probably received. There are lots of maps. The mayor is trying to show that even though Crossrail goes east-west, there are just as many benefits in the north and south of London as there are at the east and west. I find it difficult to accept that those who own a large business at the top end of the Northern line will benefit in the same way as those who own a large business in Paddington or Southall, for example, which are on the new line. It is extraordinary. I wondered how the GLA would organise this but it is clear from the example in the briefing that it is expecting the various contributions to be between £150 million and £200 million each year if the levy is set at 2p in the pound of rateable value for properties over £50,000. That clearly covers the whole of the Greater London area, so it looks to me as if there will be 2p on every business within the Greater London area.

I may have got this wrong but I have seen nothing in the Bill to allow the authority to charge different amounts in different areas. If that is the case, perhaps my noble friend can explain how this would work. I cannot imagine many businesses from the north and the south voting for it. It could be that because the proportion of finance for the project is less than 30 per cent, there will not be a ballot, but that would be even more difficult and extremely divisive.

There are an awful lot of questions to be answered here, particularly in relation to Crossrail. It could happen equally in places such as Manchester. For example, the noble Lord, Lord Smith, might want to see the tram extended where it would benefit; some businesses might want to contribute but others might say, “Why should we?” Individual boroughs in London might get together and those on the east-west route might say, “Let’s club together and do it on these routes”. The ones a little further out might do a bit less and it might be difficult getting agreement from all the boroughs but, to me, it would seem a great deal more equitable. I worry about this aspect of Crossrail. I still cannot understand how the sum of 2p, even if it is raised over the whole Greater London area, will achieve the £3.5 billion that is clearly needed.

To conclude with something that is relevant to Crossrail in particular, I have been involved over the years with the Channel Tunnel—building the tunnel and the rail link. I have also been involved in Crossrail, and I declare an interest as chairman of the Rail

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Freight Group. I am not talking about freight now, but I have been involved in it. I have found when a project is being developed that there is a need for much consultation—and many noble Lords have mentioned that. What has happened up to now with Crossrail is that the Minister responsible, who has normally been the Minister responsible for railways or transport in general, has chaired a stakeholder group with local authority groups, meeting once every six months or so. The parties involved will go through issues, which could include issues like this—technical issues and other things. On the Channel Tunnel, the Department of Transport led the process, with the Department of the Environment and some planning input as well. There now seems to be a bit of a hiatus; the Bill has Royal Assent, the staff are all changing at Crossrail and Ministers are not going ahead with meetings. It might be an idea if Ministers considered restarting some of those meetings with stakeholders and local authorities and the three departments or ministries concerned, so that all the stakeholders involved can get an overview of what is happening and explain any concerns that they have. It makes a great difference having a Minister there who is prepared to listen and answer questions. On the whole, projects go much more smoothly when that happens.

In conclusion, I very much welcome the Bill. There are a few changes that could be made, which may be beneficial. More than that, I will be pleased to hear from my noble friend how the issue of how much different businesses might be charged in different areas, depending on the benefit they receive, could be dealt with. That is one of my main worries.

5.17 pm

Lord Tope: My Lords, this has been a useful, interesting and on the whole positive debate, which we from these Benches welcome. We particularly welcome the contribution from the noble Baroness, Lady Valentine, not just for what she had to say but for the important role that she and London First have played for a number of years and continue to play in helping business and local government to speak together, better to understand where each is coming from and going to. That is a crucial role and we welcome it. I also look forward to the Minister’s replies to the questions that the noble Lord, Lord Berkeley, asked about Crossrail; some of them have interested me, too, coming as I do from a London borough.

I was grateful to my noble friend for saying that she would leave it to me to respond to the noble Lord, Lord Bates, speaking from the Conservative Front Bench. I could do so at great length, but I shall resist that temptation, not least because I think that we will be discussing these matters at each stage of the Bill. The points on which we agree—and there were some—will become clear, just as our different approach will become clear.

One comment that I would make on the noble Lord’s speech in general is that he painted an alarmist view of the dreadful things that local government would do once it was armed with this power to levy additional tax on poor, long-suffering businesses. I sat here thinking, “Does he know something that I don’t?”.

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The majority of local authorities that will have this power are currently Conservative-controlled and I am sure that he will expect even more of them to be Conservative-controlled by the time the Bill is enacted. Therefore, I worry that he knows something that I do not know and that the effects of the Bill will be far more damaging than the Minister will suggest or, indeed, than I believe they will be.

Before I go further, I should declare my own interest again, as this is the start of the process on the Bill. I am a member of the council in the London Borough of Sutton; indeed, I am a member of the executive. It is not quite an interest, but at the time of the 1988 Act to which the noble Lord, Lord Smith of Leigh, referred, I was leader of the council. I remember well the Conservative Government nationalising the business rate. What I remember best is our first statutory consultation meeting with the business rate payers after the Act was enacted. We had always had consultation meetings with business rate payers before the business rate was set, as I imagine most local authorities did. We told them why it was necessary to be whatever it was; they told us why it was too much and we then had a general discussion on what the council was and should be doing.

At the first statutory meeting—the ratepayers were not required to attend, but they did—I explained to them first that the council no longer set the business rate. I said that, although the council would continue to collect it, it would not keep their money and that the amount that we got when it was redistributed from the national pool would bear no relation whatever to what they had contributed—nor, indeed, would there be any great benefits directly from any increase in the business rate. They looked at me and asked, “What is the point in having the consultation?”. It was rather bizarre that we were statutorily required for the first time to have a consultation on something over which evidently we had no power at all.

The noble Lord, Lord Smith of Leigh, is right to refer to the damage that that part of the Act did. What he forgot to say is that the Labour Party, committed at that time to denationalisation of the business rate, has now been in power for 12 years and has done absolutely nothing about it. Indeed, I regret very much that through those 12 years, and even now, the Government, like their predecessor, have failed completely to tackle the whole thorny issue—and it is a thorny issue—of local taxation generally, of which this is an important part. In arguing for the return of the business rate, I would not wish to be thought to be saying that it is necessarily the best form of business taxation at a local level, but it is what we have now.

I declared my interest as a councillor for a London borough that is just about the most distant one from Crossrail. Perhaps I may say, therefore, that my commitment and my party’s commitment to Crossrail, and now to this method of helping to fund it, is absolute; I have no qualification whatever to make about that. However, I know that many of the local businesses in the London Borough of Sutton—I suspect that this might be so in other outer London boroughs north and south, too—will not be consulted or have a vote on it. Personally, I do not think that that should

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be the case. I suspect that, if they were asked, they would be a little cynical about the suggested £13 million of benefits that will come to the borough in 2026. If asked, they might say that they saw the economic benefits from extending the Croydon Tramlink into our borough being of much more immediate and direct benefit than Crossrail. I say that by way of comment, not in any way to reduce my commitment or my council’s commitment to the funding of Crossrail. It is vital that that goes ahead. I certainly would not want to do anything that might damage that funding.

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