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18 May 2009 : Column GC509

Grand Committee

Monday, 18 May 2009.

Business Rate Supplements Bill

Bill Main Page
Copy of the Bill
Explanatory Notes

Committee (2nd Day)

3.30 pm

Clause 5 : Prospectus

Amendment 18 not moved.

Amendment 19

Moved by Baroness Hamwee

19: Clause 5, page 3, line 33, after “prospectus” insert “and a summary of it”

Baroness Hamwee: I will speak also to Amendments 20, 21 and 22. These amendments are about the prospectus that has to be issued as part of the consultative process. In part they come from the Federation of Small Businesses. The prospectus may be a complex document; I think it will have to be. My amendments provide for summaries of the prospectus, not to avoid the need for clarity, but to ensure that the information is accessible in every way.

There may well be campaigns around the proposals for the use of the business rate supplement. We all know how readily issues can be oversimplified. It is important that people can find a jargon-free explanation of the proposal which they can absorb without having to spend too long on it. My amendments propose that a summary as well as the full prospectus should be on the website and available for inspection.

Amendment 21 is about the availability of the prospectus. It follows an amendment tabled by my honourable friend the Member for North Cornwall in the Commons Committee. Like him, I am proposing that a copy of the prospectus should be available at the principal offices of the billing authorities, if the levying authority is not also the billing authority.

I thought that my honourable friend’s amendment produced one of the less persuasive responses from the Government on this Bill. The Minister argued that putting a copy of the prospectus in what would essentially be a small number of town halls would create additional costs and that accessibility should be balanced with those additional costs. He said:

“We need to show some restraint, therefore, in the requirements that we place on authorities”.

There are a lot of requirements being placed on authorities and I would have thought that copying a prospectus or running off another copy from the computer was not nearly as onerous as some of the things that they may have to do. He said:

“Making copies available in the principal offices of the lower-tier authorities could lead to confusion for ratepayers”,

who might think that the upper-tier authority was responsible. He also said that,

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Whitehall imposes an awful lot and I think that this is something that it could very usefully impose. It is an utterly feeble response to a practical suggestion. I became the chair of my local authority's planning committee at a time when planning was being opened up to the public quite dramatically. I discussed with officers my proposal that copies of planning applications should go into local libraries so that people could see them somewhere that was convenient. The arguments that I was faced with were the cost and breach of copyright. I said, “Well, let’s do it and see what happens”. Nothing happened, except that people were able to go and see the applications somewhere local to them. I do not think that this is a major item in terms of complication, complexity or cost. I hope that the Government can look more favourably on it.

Amendment 22 provides that as well as the prospectus being available at all reasonable times of the day, it should be available for a reasonable period of time, which speaks for itself. It may well be implied that that would have to be so, but if the reasonable times of the day are spelt out, I wonder whether I am right in thinking that “for a reasonable period” would not actually be implied.

These are minor matters compared with the totality of the proposals in the Bill, but they would make it a great deal simpler for those who are going to be asked to pay to find out what they are being asked to contribute to and to be able to take decisions accordingly. I beg to move.

Lord Jenkin of Roding: My appearance at the table here beside my noble friends Lord Bates and Lord Cathcart does not suggest that we have changed places. I hope noble Lords will forgive me, but it is simply easier for me to hear sitting here than it has been when sitting behind. A number of us in the House suffer from various levels of hearing impairment and I am certainly one of them. We will see how we get on.

I support the amendments, but I would like to add one thing. I do not know whether other noble Lords have been following the proceedings of the Select Committee under the chairmanship of the noble Lord, Lord Renton of Mount Harry, which is looking at the relations between this House and the public. One of the things that has stood out even from just the first two or three evidence sessions—I spent part of the weekend looking through the most recent one—is that concentrating on written documents being available at libraries and being sent within certain deadlines or available for inspection within a certain number of days is yesterday’s technology. Increasingly, one is hearing that it is the availability of electronic communications, and in particular of the internet, that is important. Huge numbers of people and businesses in this country and elsewhere rely on the internet to be aware of what is going on. If one is going to ask local authorities putting together their prospectus for a BRS to make sure that the people who are going to be affected by it have an early opportunity to see what is there and perhaps an opportunity to comment, that is by far the most effective method now. That is today’s and tomorrow’s technology. I am not quarrelling with the noble Baroness’s amendments, which are a useful addition to the Bill, but I hope that local authorities

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now recognise that if they are going to communicate with the businesses in their area, it might make a great deal of sense that they should do it primarily through electronic means.

I believe that this is what we are going to have to do. We await the report of the Select Committee, but having seen some of the evidence I hope that it will recognise that. Some noble Lords already have their own blogs. That is one of the ways in which you reach a wider audience. It is not necessarily for a conversation—you can waste an awful lot of time doing that—but simply to make information available. It seems to me that that is what the clause and the amendments are about and I would be grateful if the Minister could comment on that.

Baroness Hamwee: I wonder whether it would help the debate if I confirmed to the noble Lord that one of my amendments relates to the requirement to place an electronic copy on the website. I am seeking a summary of the document to go on the website as well as the full document.

Lord Bates: I join my noble friend Lord Jenkin of Roding in welcoming these sensible amendments, which reflect the world as we now have it. The key point here must be engaging with the local business community and the people who might pay the business rate supplement. That is the purpose of Clause 5, we are told. These amendments simply expand that by providing a summary. That is a very good idea. A lot of these documents that will come forward will, necessarily, be extraordinarily long to cover the legal and financial data as well as the detailed plans. Simply saying that consultation consists of posting a huge pdf file on a government website somewhere so that somebody can download all 360 or 400 pages of it and trawl through it is clearly unacceptable, as well as being pretty bad practice for the environment when it comes to printing such a document. It ought to be there.

In supporting the amendments I should like to press a little further to ask whether we can look at methods that have been employed in the private sector to communicate with people and to get feedback. For example, if this was a private sector document I am sure there would be a page of frequently asked questions as well as a summary of the document. Essentially, people want to check what it means for them and how much they have to pay. That is pretty simple. We should make sure that that information is available.

Another point on which the technology has been available for a long time is the whole area of blogging. You can see on the BBC website and many commercial websites that this is a very good way not only of allowing people to see what the document means for them, but of seeing what other people in the local area have said about it. I would have thought that it would be the true mark of open government to move into allowing people to post responses on websites so that it all becomes part of the public domain rather than having to wait for the final document, which then again in hard copy summarises all the representations that have been made at great length. We also have to

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remember that we are dealing with the business community, which, by and large, is rushed off its feet, particularly at present. It does not have the luxury of government relations departments to pore through these documents; it has to do it itself. Anything we can do to make the document as succinct and clear as possible, to make it electronically available, and to make it possible for responses to be given in that same format would surely be in keeping with the modern era.

3.45 pm

Lord Jenkin of Roding: I hope the noble Baroness will forgive me—we are in Committee—but there was one more thing that I meant to say. Towards the end of last week we received from the department what we were referring to last Monday as the road map, containing the draft proposals on ballot and administration arrangements. I had understood the Minister’s covering note to say that we would get a hard copy. I have not had that; it has not arrived. This morning I printed off the attachment to her minute. I am afraid that on my printer upstairs, that took a good deal of time and a very large quantity of my scrap paper. We have had this before with government departments. I will not go through all the difficulties. Ministers are desperately anxious that documents should reach noble Lords here in time and they do not. It was helpful that we had the electronic copy, which enabled me to have it with me this afternoon, but we ought to have had a hard copy. The noble Baroness may wish to make her own investigations, but it seems that somewhere along the line there has been a failure of communication.

The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Andrews): Let me start by apologising if noble Lords did not receive hard copies. I was very glad that we were able to get it out in the time that we suggested we would on the Wednesday by e-mail, but I will certainly look into that.

This has been an extremely helpful debate. It is very good to have all those ideas on the record for future reference, not least for local authorities, levying authorities and businesses as they come to draw up their prospectuses. I completely understand and absolutely share the motivation behind the amendment. Much of what the noble Baroness said appeals to me. Clearly, we want to be absolutely sure that copies of the prospectus are going to be readily available for the people who are liable to pay the supplement. I take the point that the noble Lord, Lord Bates, made about how busy the business community are.

However, I have to endorse much of what my noble friend said in the other place, because it runs through the Bill. We are trying not to over-prescribe. We are trying to signal to local authorities that they are free to go further than the minimum standards that we are laying down in the Bill. We are often berated for being too top-heavy in relation to local authorities. This is one instance in which we are very conscious that local authorities are going to have to do things their own way. For example, we are leaving it to authorities to decide how best to conduct the consultation that they

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must carry out with those who are potentially liable for the supplement. Clearly, these projects are going to differ in size and scope and it is going to depend on what existing networks there are and what technologies are commonly used and so on.

In the same vein, let me reassure the noble Baroness that we are leaving it to authorities to decide how to design their prospectus, but Schedule 1, for example, requires them to include cost-benefit information. I am very happy to put on the record that there is nothing to stop any local authority setting out an executive summary or a freestanding summary. It definitely must be in jargon-free language. It is extremely important that people know what they can expect from their contributions. Levying authorities can choose to send a summary to every business in their area. On Amendment 21, for example, hard copies of the prospectus must be made available at the levying authority’s principal office. As the noble Lord, Lord Jenkin, rightly said, they have to be able to make the maximum use of the speediest and most relevant technology these days.

We are requiring levying authorities to make electronic copies of the prospectus available on the website. There is no reason on earth why they should not make the summary available on the website in the same form. When we come to look at where this information is going to end up, again authorities are going to want to make sure that its location is clearly signposted so that those with an interest can access it, but they can go further if they choose to make further copies available in billing authority offices or local libraries or other resource centres. That is absolutely fine. We would welcome and encourage the maximum spread of this sort of information for the local community and we definitely agree on the point about reasonable times and reasonable periods.

We actively encourage authorities that think this is the best approach for their area and their project to use all the vehicles that they have available to them, but I do believe that we should not put unnecessary detail in Bill. We should not tell authorities how to do things. I have stood here more often than I care to remember being asked, “Why does the Minister not trust local authorities?”. I do trust local authorities to do the right thing in their area. It is proper that minimum standards are put in place, but I also think that they have to decide what is best and what communication will be most effective and most persuasive.

In the light of this debate, it is important that we spend some time on the guidance and make sure that it reflects the breadth and scope of what might be possible so that we pick up some of these ideas and reflect them in guidance. I hope that the noble Baroness will be satisfied with that.

Baroness Hamwee: I recognised that I was going to be caught by my own argument. In response to the points made by the noble Lord, Lord Bates, about frequently asked questions and blogs, I have written, “Nothing to preclude that”. I am aware that I might be arguing against myself, although it would be quite nice to see whether we could be the first group of people to get the word “blog” into primary legislation.

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I applaud the noble Lord, Lord Jenkin of Roding, for being so ambitious as to think that we might anticipate tomorrow’s technology. I am barely catching up with yesterday’s, but he is absolutely right.

The noble Baroness leaves me with a question, which I suppose is rhetorical: if we leave it to local authorities to decide how to deal with the prospectus, why do we need Clause 5(3)(a), for instance, which says that the levying authority must place an electronic copy on its website? Simply requiring the authority to publish this prospectus, on the basis of her argument, would be enough. However, I am not going to get any further at this point. These may seem small matters, but they could be fairly significant. I am obviously grateful to the Minister for her reference to guidance. At this stage I beg leave to withdraw the amendment.

Amendment 19 withdrawn.

Amendments 20 to 23 not moved.

Clause 5 agreed.

Schedule 1 : Information to be included in a prospectus for a BRS.

Amendment 24 not moved.

Amendment 25

Moved by Lord Jenkin of Roding

25: Schedule 1, page 21, line 18, at end insert—

“(d) the likely impact of the imposition of a BRS on those contributions towards funding public transport works that are treated as allowable deductions.

In this Schedule—

“public transport works” means works undertaken to provide services on which members of the public rely for getting them from place to place when not relying on facilities of their own;

“allowable deductions” means expense occurred in the course of carrying on a business under Schedule A or Schedule D (Cases I and II) of the charge to tax under the Income and Corporation Taxes Act 1988.”

Lord Jenkin of Roding: I beg to move Amendment 25 standing in my name and that of my noble friend Lord Brooke of Sutton Mandeville. I have been asked to proffer his apologies to the Committee. He had expected this amendment to be dealt with last Wednesday. He is not able to be in his place today and I readily agreed to add my name to the amendment and to move it.

The amendment inserts a further requirement for the prospectus when a supplementary business rate is sought. The authority would have to assess the impact of the proposed supplementary rate on voluntary contributions that businesses may already be making to support public transport projects. The amendment had to be drafted in that form to put it within the rules of the House.

The issue that I wish to raise briefly this afternoon is more fundamental. Through the amendment I seek to explore how far the voluntary financial contributions made by businesses to fund public infrastructure projects from which they benefit are tax-deductible.

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That is why the voluntary contributions concerned are defined in the second part of the amendment as those that are allowable against tax as business expenses under the Income and Corporation Taxes Act 1988.

I am well aware that the whole question of whether local authorities should have powers to raise additional business rates is contentious. I read the Second Reading speech of my noble friend Lord Bates and I very much understood what he was saying, but I do not intend or need to take a position on that question this afternoon when dealing with this rather specific amendment.

The motivation behind the amendment is prompted by the funding of the Crossrail project. I think it is fair to say that there is general agreement that an additional business contribution is necessary to support Crossrail. On Second Reading of the Crossrail Bill I asked the Minister what would happen if the voluntary contributions from business were for some reason not forthcoming. I have not checked it out, but my recollection is that we would have to deal with that if it happened. Of course, the remedy, following the reports to which much reference has been made, was that there should be new legislation, which we now have before us, to provide the contribution from the private sector to help to finance that hugely important project.

The City of London Corporation agreed in October 2007 to contribute £200 million out of its own coffers. It also agreed to seek voluntary contributions—that is why this issue arises—up to a total of £150 million from businesses that will benefit from Crossrail. Of course, as we all recognise, raising voluntary contributions at the present time must be particularly challenging, but any business considering making them is likely to be more favourably inclined to do so if it can be sure that such contributions will be tax-deductible as a business expense.

The position of business rate payments is quite clear. The Business Income Manual, produced by Her Majesty’s Revenue and Customs for its staff and published for the information of taxpayers in accordance with the code of practice, provides:

“Business rates are payable in respect of non-domestic premises. If part of the premises is used for domestic and part for non-domestic purposes, the charge is limited to the non-domestic part. Business rates are therefore usually an allowable deduction in computing profits assessable under Schedule D Cases I, II or under Schedule A.”.

If business rates are deductible, it follows that the supplementary business rates envisaged by this Bill will also be deductible. Perhaps the Minister will confirm that.

As a matter of policy, if supplementary rates levied to support public projects are deductible, it would seem right in principle that voluntary contributions made by businesses for precisely the same purposes should receive precisely the same treatment. This seems to be supported by the law if businesses make contributions because they would benefit from the improvements, which presumably will usually be the reason prompting them to contribute. It is a long time since I was practising at the tax bar, but my recollection is very clear. A business expense is allowable if it is incurred wholly and exclusively for the purposes of the business. Those who make voluntary contributions

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to the Crossrail scheme will, without doubt, do so in the context of much-improved cross-London communications that the scheme will bring to their business operations, and therefore because they are benefiting from it.

Therefore, the case for deductibility appears entirely legitimate. However, in view of the importance of the Crossrail scheme and the incentive which deductibility may provide to businesses which might be inclined to contribute voluntarily, it really would be helpful if the Minister could indicate the position in general terms either today, or perhaps—she may prefer to consult—in correspondence. Of course, I will understand if she wishes to write with a substantive reply, but I am sure that she understands that tax deductibility may be quite important to a business that is contemplating making a voluntary contribution. I should have thought that the Government would wish to support anything which could help this absolutely crucial infrastructure forward. I beg to move.

4 pm

Baroness Andrews: I am grateful to the noble Lord for how he introduced the amendment and the background, which is useful to have on the record. I am sure that the noble Lord, Lord Brooke of Sutton Mandeville, will be pleased that we have had a full explanation in that form. I can be quite swift in answering this. It clearly raises an important point as to whether voluntary contributions to BRS will be permitted deductions from corporation tax, as is the case with rates generally.

I can confirm, as the noble Lord has asked, that BRS builds on the current business rates system. As such, any BRS payment a local business is required to make towards the cost of the project will be a permitted deduction from corporation tax.

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