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Lord Bates: I shall be brief. The amendment relates to trying to secure some specific responses from the Government. If a business that is currently liable to the business rate supplement in the circumstances that have been outlined were to cease trading and still owed business rate supplement, what mechanism is in place to deal with that? Will the local authority simply line up as a creditor along with other creditors to the company? If a major retailer, say a B&Q superstore or a Woolworths, is on the brink, is there flexibility to ease the situation? I merely seek to elicit information from the Minister on the position. I beg to move.
I expect that the Minister will tell me that my concern is met because the two national authorities can simply decide if it is minor or incidental information and would not exercise their power to cancel, but I should be grateful if the Minister would confirm that I have understood that correctly.
Baroness Andrews: I shall start with Amendment 50A, which seeks to put beyond doubt that when a ratepayer requests it, the levying authority may cancel its BRS. I am sure that the noble Lord knows that that is already covered in the Bill. There is nothing preventing a levying authority stopping a BRS early in a controlled way. For example, it can choose not to proceed with a later stage of the project in the light of representations received. That would amount to a variation of the BRS and, as we have previously discussed, depending on what is written in the prospectus, it is possible that such a variation could be made automatically. Otherwise it would technically require consultation in accordance with Clause 10 and, in some cases, even a ballot, although that would not be arduous if a substantial number of representations had been received.
In other cases, if the levying authority simply abandons the project, the Secretary of State has the power in Clause 21(4) to provide in regulations that when the BRS is to come to an end, ratepayers do not continue paying for a project that is no longer happening. I hope that the noble Lord is reassured that levying authorities can end a BRS early.
Amendment 61B considers the role of the Secretary of State by making it clear that he cannot intervene when a levying authority has departed from a minor or technical aspect of its BRS plans on which businesses considering the original proposals will not have relied. Clause 24 is sensible in that it allows the Secretary of State to intervene and potentially to cancel BRS and order the return to businesses of the sums paid in those circumstances when a levying authority acts inconsistently with information that it has provided to business at key stages of the BRS process. That cuts across the fundamental requirement of the integrity of the scheme and the partnership. The information is included in its final BRS prospectus or in a variation proposal under Clause 10 in the course of a consultation with business, or in connection with the holding of a ballot. So this is very much a nuclear option.
I do not expect levying authorities will be acting inconsistently with the information that they give business. Of course we know that mistakes can happen and that difficulties can arise, but I expect that if that ever happens, the levying authoritys business will spot it; they will be able to anticipate it and be only too ready and able to pull up the levying authority, and so they should. The levying authority should act quickly and decisively to get back on track to deliver the BRS and the project it is promised to.
In very rare cases, a levying authoritys local partnersfor example, the ones on the regional improvement and efficiency partnershipmight step in to help it get back on track to deliver the project set out in the prospectus; there are good intervention processes available. It is only in the most exceptional cases, therefore, when local engagement with business and other partners has failed to resolve the problems a levying authority might be facing, that the Secretary of State would consider stepping in. Even then, cancellation would be the last resort because the projects we are contemplating are complex, long term, innovative and no doubt expensive. We want BRS to work and to deliver what is promised, and working together to achieve that will always be the first resort, and cancelling of the BRS, with all its implications, will always be the last.
I can offer the noble Baroness further reassurance. The Secretary of States power under Clause 24 does not extend to allowing intervention in response to minor technical issues where a levying authority does something slightly different from what is in its prospectus in circumstances where business would simply not be interested. She has already quoted Clause 24(1) and the requirement for there to be a material inconsistency. The Secretary of States power applies where there is a material inconsistency between what the levying authority has said it will do and what it is doing. A minor inconsistency will not trigger the power; it is there to be exercised only in extreme circumstances where the BRS and the project being delivered are different from what was clearly set out and promised. I confidently expect the use of the power in other circumstances to be the subject of a challenge through the courts.
Baroness Hamwee: On the second of the two amendments, in regard to cancellation I was concerned not with minor inconsistency but with material inconsistency in a minor matter with minor information, which is different. However, what she had to say before that section of her notes reassured me and I am grateful for that.
Lord Bates: It may be because of the stage that we have reached in Committee that I am slow on the uptake, but I posed a specific question and I am not sure that the answer that the levying authority can end a scheme early answered that question. Let me phrase it again. For example, if a retail premises with a rateable value of £1 millionit is a substantial businessis currently paying a major business rate supplement contribution to the order of £20,000 and falls into financial difficulty, with whom does the liability rest? Is it with the levying authority? What would happen with the scheme if that £20,000 was the difference between some of the improvements going ahead and not going ahead? How would that be handled? Could any compensation be forthcoming from the Secretary of State to compensate for that?
My final question is whether in the business plan and prospectus which are put forward for any scheme, it would be advisable to introduce some contingency or reserve so that, in such circumstances, the costings would be there to finish the project, even if one or two of the major contributors were no longer there.
Baroness Andrews: I am sorry. I gave a very abstract answer to that specific set of questions. My understanding is that the prospectus has to cover a number of different contingencies. It has to set out what would happen if things went awry in different ways, and I think that it would have to spell out how a major contributor going bust under those circumstances would be dealt with. Paragraph 23 of Schedule 1 says that there must be a contingency process for dealing with unforeseen circumstances. I think that we discussed refunds at one point, which is part of the notion of contingency. I sense that if things reached a critical stage, the prospectus might have to be revisited and varied in terms of the project. Therefore, those sorts of circumstances would certainly be covered. I hope that that is of more help to the noble Lord.
(1) Where a person is, by reference to a hereditament, liable for BID levy in respect of all or part of a financial year in respect of which the person is, in relation to that hereditament, subject to a BRS imposed by the authority, the chargeable amount payable in relation to the BRS shall be offset in accordance with subsection (2).
Lord Bates: Amendment 51 would mean that, where a person was liable for a business improvement district levy and subject to the business rate supplement imposed by that authority, the chargeable amount payable in reference to the business rate supplement would be offset to avoid double-charging.
and Amendment 54 would leave out subsection (4), which states how the rules must be made. As the Bill stands, the levying authority is enabled to make rules regarding what to do when a person is liable for a business improvement district levy and subject to a business rate supplement. Our amendments would remove the levying authoritys right to make rules about that and, instead, specify that liability for the business improvement district levy would be offset against the amount that the person would pay for the business rate supplement.
The argument for this proposal is obvious in that businesses could well see themselves being charged twice for the schemes. The whole issue of additionality under this heading is also brought into question. We do not want to risk harming the business improvement district schemes. Everyone has said that, where they operateand of course some, such as the New West End Company, operate here in the capitalthey seem to do a very good job of integrating businesses and improving the local area, and we do not want to harm them. At the same time, huge pressures are currently being put on businesses, as I mentioned earlier. Therefore, the fear that levying authorities will raise a business rate supplement but at a sufficiently low threshold so that a ballot is not triggered is real. Because businesses are under so much pressure, they will not be able to vote against the business rate supplement and will then be forced to vote against the business improvement district levy where they do not have a vote on the community improvement levy.
So there are a range of schemes. The amendments aim simply to remove duplication and introduce tax simplification. Taxation under this Government has become a nightmare for anyone involved in businessperhaps not so for the accountants, who I am sure quite welcome the complexity. Simplicity in dealing with these matters will be very important in monitoring
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Baroness Hamwee: I have Amendments 52 and 55 in this group. Amendment 52 would amend Clause 16, which relates to the interaction with the BID levy. Clause 16(1) provides for setting rules for the interaction. My amendment would require consultation with those liable for it and the billing authoritywhich may be different from the levying authority for BRSbecause we do not agree that there should be an automatic offset; there are likely to be entirely different objectives for a BID and BRS in a particular area. Not everybody paying the BID contribution will be liable for BRS, but, before the levying authority comes to a view, it should undertake a consultation.
Does that mean all BIDs within the levying authoritys area? I do not know that they can, because subsection (4)(c) requires application uniformly throughout the area. My imagination ran out over consistently.
Baroness Andrews: Perhaps I may deal with the offset first and Amendments 51, 53 and 54. Linked to that is Amendment 55A, which relates to Crossrail. Amendment 52 has a different focus. It would leave the decision whether to have an offset to the levying authority, but proposes, as the noble Baroness has just said, that it first be required to consult those liable for the BID levy and the relevant billing authority. Amendment 55 probes the definition of consistently, which I hope that I shall have an answer to by the time I come to the end of my speaking note.
I have listened carefully to the arguments. The concerns expressed have been raised not only today but also in the other place. One very clear message that has emerged from these debates, which I hope that the noble Lord, Lord Jenkin, takes as much pleasure from as I do, is that BIDs have been a great success and are a popular initiative. We are determined that they should continue to grow alongside BRS.
I should explain why I, like the noble Baroness, Lady Hamwee, do not think that an automatic offset is the right way forward and why it cuts across the whole thrust of the Bill, which is to devolve the key decisions to local partners and not impose on them. I do not think that I need to rehearse the difference between the BRS and the BID, because I think that noble Lords are very familiar with the scale, the scope and the set of objectives.
As we all now know, the Bill provides an opportunity for local authorities to work together to develop proposals that will enhance economic development. Authorities will have the flexibility to decide how the levy should be set, subject to the overall limit of 2p in the pound of rateable value. They can decide whether to offer more generous safeguards to businesses. They can, for example, set the threshold for liability above the £50,000 threshold. They can decide, as we have just debated, to exclude empty properties.
Against that background, it is therefore absolutely right and consistent that we should leave the decision about a potential offset for those paying BID levies to the local levying authority. Amendment 55A provides that the GLA would not be required to offset BID liabilities against BRS liabilities for its Crossrail BRS partners. The choice will be there for them, to be worked out in negotiation with local partners, bearing in mind the full set of local factors. I recognise and understand that there are strong and persuasive calls for an automatic offset. There are equally strong calls against that, such as that from the noble Baroness, Lady Hamwee.
I give the noble Lord two arguments, not from the Government but from groups that are deeply involved in these situations, such as the South Bank Employers Group. It is an association of major organisations on the South Bank in the Waterloo and Blackfriars areas which helps to deliver a BID-type benefit for their local area through an alternative but voluntary BID levy. It considers that having an automatic offset for BID payers would be unfair. It said:
The fact that businesses have chosen to contribute to this fund of local additionality ... should not in any way relieve them of the obligation to contribute to a major pan-London project like Crossrail.
This would be seriously unfair on major businesses which are not in BID areas, whether because they have voted against the BID proposals or because a BID proposal has not come forward, or because the area is not seen as suitable for a BID.
Baroness Andrews: I take that point entirely. However, there are enough reasons not to go down this route of an automatic offset, particularly when the crucial point is that levying authorities can use their discretion on whether to have one or not.
I am afraid that Amendment 52 is unduly prescriptive, although I understand why the noble Baroness has tabled it. We debated levying authorities setting out their detailed plans in their prospectus last week, including whether they intend to offset BID levies against liabilities for BRS. In the draft guidance that we issued in January for consultation, at paragraph 3.41, we make the point that business will have the scope to challenge prospectus assumptions at the consultation stage. For that reason, we advise that it is in the levying authoritys best interests to ensure the
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Given that requirement, it would be unnecessary to require them formally to consult about whether there should be an offset for those paying BID levies before they carry out their formal consultation on the prospectus. Again, we should leave it to authorities to determine how best to engage with businesses, and to have that conversation before they finalise their prospectus.
Amendment 55 seeks to clarify whether a levying authority could choose to treat BIDs in its area differently; for example, by offsetting the BID liability of persons in BIDs established before the BRS was imposed but providing no offset for persons in BIDs established after the BRS was imposed. The noble Baroness asked quite rightly about the interpretation of consistently.
I hope it is sufficient to tell her that the BID rules must be the same for all BIDs. The same level of offset should apply wherever the BID is and whenever it is established, be it before or after BRS. I hope that that answers the noble Baronesss question. Clause 11(4)(c) requires the BID rules to,
Baroness Hamwee: The noble Baroness is puzzled, because the explanation seemed, as the Minister herself decided, to be of subsection (4)(c)the uniform application. But consistency is in addition to uniformity, and that is where my puzzlement remains. I am sorry to have bowled the Minister a slightly awkward ball; I had thought that I had warned her, or asked somebody to warn her, about this, but it is obvious that I did not.
Lord Jenkin of Roding: Before my noble friend withdraws his amendment, I acknowledge the kindness of the Minister in saying that I would be as pleased as she is about the success of the BIDs. She obviously knows that I introduced a Bill into the House of Lords to introduce BIDs more than four years before the Government. As the noble Baroness, Lady Hamwee, will rememberbecause she took a full part in itmy Bill went through all stages in the House of Lords. It had its First Reading on 20 May 1997 and finally had its Third Reading on 6 April 1998. It was debated at some length on the Floor of the House. It then went to another place and, of course, as a Private Members Bill that the Government did not want at that stage to support, it fell.
So you may imagine my astonishment when Part 4 of the Local Government Act 2003 came back and, lo and behold, introduced BIDs. Even more astonishing was the fact that it incorporated almost word for word what had been in my Bill in 1997. What really stuck
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So, yes, as the Minister has acknowledged, I am delighted that BIDs have been such a success, but the Government need to reflect on whether simply to take over somebody elses legislation almost word for word and introduce it as their own Bill without any acknowledgment is the best way to legislate.
Baroness Andrews: I am happy to put it on the record that I do not think that it is either good politics or good practice not to acknowledge the origins of some legislation. It is all much better government if there is clearly consensus of opinion behind what we do. I am sorry that it happened in that case.
Lord Bates: It is nice to see peace breaking out all over the Committee. In this wonderful, fast-moving world in which we work, I am sure that imitation in the policy process is the sincerest form of flattery. I am sure that the Government have spent much of the past three years in Queens Speeches, and certainly in their Budgets, flattering Her Majestys Loyal Opposition by picking up so many of our ideas.
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