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Secondly, some of the language that is being used here and, indeed, in the other place is concerning, because it talks about business not making a significant contribution and having a veto. However, one-third of the cost of a capital project could be a very significant sum-perhaps £10 million, £20 million or £100 million. On Crossrail, the potential contribution is a few billion pounds. The sums could be very significant. It behoves any successful scheme to engage the business community when such a large amount of money is being considered. The notion that a scheme might be pitched by the local authority so that it comes in just below the one-third threshold to avoid the difficulty of having to go through a ballot-a concern quite rightly raised in Committee by my noble friend Lord Cathcart-remains a real concern.
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The next point is similar. We are looking at getting business on side, but it is clear that a number of large business organisations, such as the CBI, have expressed serious concern. We are talking about a ballot of a cohort of businesses on which this investment measure, which is designed to improve their lives, may have an impact. That begs the question. Which business on earth would vote against something that was designed to improve their situation and improve economic regeneration? It has to be very much in their interest. Why would a levying authority not want to have the mandate of having business on side?
We are not talking about every business. That is an important point to get on the record. We are talking about a relatively small group. The threshold for those liable to the business rate supplement is a £50,000 rateable value. In terms of square footage and, possibly, the number of employees, a business with a £50,000 rateable value is a pretty significant one. This will probably disproportionately impact a lot of retail businesses. We are not talking about tens of thousands. Therefore, some of the arguments that the Minister has made about the difficulties of undertaking the ballot may not arise. However, tens and hundreds of businesses in an area will be paying a significant amount of money to improve that area. Our argument is that they should be considered.
The Government started from a position of saying, "No, local authorities can be entirely trusted with this responsibility; there is no need to put any obligations on them at all". However, as a result of the Committee and Report stages and scrutiny in the other place, the Government have moved a long way to the position that we have been arguing for. In their amendments in lieu, they say that there should be an involvement. In other words, you cannot just walk away from a ballot; you have to give a reason. They say that there will be a statutory responsibility to engage with local businesses. That is a very helpful point.
The levying authority must also provide assurance that it is not levying a sum that is in addition to. That is an important check of the ballot. One of the great concerns among those of us on this side of the House is that, far from being dreamt up by a great enterprising department as a means of finding new ways of regenerating our inner-city and urban areas, this scheme has been generated by the Treasury as a means of finding new ways of raising money. The principle set out in Clause 3 deals with additionality and says that, in addition, funds cannot be used on housing, social services, education services, services for children, health services and so on. That further restricts the levying authorities' room for manoeuvre.
So the Government have travelled a very long way as a result of the scrutiny that both Houses have brought to this issue. However, they have not moved far enough. That is why Amendment A1 is required. It would provide an additional safeguard. Most important, it would provide a way of involving businesses and motivating them to engage in partnership with local authorities to promote their area. I should think that that will be widely welcomed.
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Baroness Valentine: My Lords, I support Amendment A1. I remain in favour of the principle of the Bill-to provide a mechanism for business to make a financial contribution to local infrastructure provision where it is in favour of that infrastructure. But that is the crux: are they in favour? As noble Lords are aware, I am chief executive of the non-profit-making business membership organisation London First. I therefore hear the concerns of businesses from many different sectors every day.
At a time of economic uncertainty it is not helpful to be threatening additional costs on businesses alongside the planned effects of revaluation, loss of empty property relief and a general uplift in rates. Businesses, particularly those disproportionately exposed to rates, which includes most retailers, are very concerned about the prospects of being bounced into paying for unnecessary or even unhelpful projects from well intentioned but sometimes misguided local authorities. A ballot of businesses is the best safeguard to prevent that from happening. I join the noble Lord, Lord Tope, in asking the Government to think again.
Lord McKenzie of Luton: My Lords, I would hope-not with great prospect, I am bound to say-that I could persuade noble Lords who have spoken to Amendment A1 not to press it.
I start with the contribution of the noble Lord, Lord Tope, and acknowledge in what he said that he is supportive of the thrust of the Bill. Indeed, I acknowledge his position in local government-with more than 30 years' service, I think, and still going. He made an important point in recognising that the provisions as they stand require engagement with the local business community. There is no prospect of a BRS just being introduced effectively over the heads of local businesses whatever their views. All the consultation guidance makes that clear. I refer noble Lords to the Business Rate Supplements: A Consultation on Draft Guidance to Local Authorities, which we published in January 2009. It sets out the fact that any projects that come forward should relate to and be embedded in the regional strategies that are in place and the local strategies that an area would have. In particular, the paragraph about the engagement of business in some of the assumptions states:
"Ultimately, business will have the scope to challenge prospectus assumptions at the consultation stage and for that reason it is in the levying authority's best interests to ensure the robustness of its business case and to ensure work on the preparation of the prospectus involves detailed discussions with local business and other interested parties".
That must inevitably follow and I believe that that should allay the fears of noble Lords.
I understand that the noble Lord, Lord Tope, was saying that the Government's proposed amendment in lieu was a helpful step and that, of itself, it is something that he would support. However, although he is moving an amendment to say that there should be ballots held in every case, I thought that the tenor of his comments was also that the one-third threshold was too high. I do not know from that whether his position is that, if the threshold were lower, he would have a different view on mandatory ballots. As it stands, the proposition before us is about mandatory ballots.
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3.45 pm
To a large extent, the arguments have been ranged over in the other place and in your Lordships' House. There are probably no great new points of substance to bring forward, but we have moved in a material way to address noble Lords' concerns by the amendment in lieu that I moved earlier. We hold fast to our objections to mandatory ballots in every case.
The noble Lord, Lord Bates, supported the Motion moved by the noble Lord, Lord Tope. I think that beneath that was support for the thrust of the Bill, notwithstanding our residual disagreement. He says that we have created an anomaly with BIDs. We need to see the substance of that. BIDs are much more likely to be localised projects and, as the history of BIDs suggests, business-led rather than more strategic, local authority-led projects. I have not been through each of the BIDs in operation, but the thrust of them has very much been business-led in more localised areas. As has been discussed before, they are more likely to provide a significant element of the funding than might be the case in some of the BRS situations.
On the argument that we must have a ballot in every case because, if there is a threshold above which ballots have to take place, the authorities will be manoeuvring around it, given the robust approach that must take place-the development of a business case, the consultation on it and the initial prospectus-it would become pretty apparent if anyone was trying to pitch a scheme in a way that circumvented the threshold, wherever it were put. Notwithstanding that, the number of businesses that might be involved in a ballot depends on the scale of the BRS and the particular area; I do not know. However, ballots, even if the numbers are relatively small, do not come cost-free.
The noble Baroness, Lady Valentine, expressed her support for the amendment moved by the noble Lord, Lord Tope, although I understand that she is still happy for Crossrail to be outwith the basic position that we took. However, I take issue with the concept that businesses will be threatened with extra rates. The ethos of the Bill is not about threatening local businesses to extract money from them; it is about trying to identify projects for which additional spend will have beneficial impacts on business development in an area. Together, all the locks that are there to protect local business-the threshold, the 2p cap and it needing to be extra spend-are a genuine series of protections. It is not right to say that the Bill is just about seeking to extract resources from local businesses.
I remember from my days on a local authority, when the domestic rate was set locally, there was a brief engagement with the business community when it was set-normally over a cup of coffee with the borough treasurer. There was not a focus on strategic issues; it was a million miles from that. Local authorities have come a long way with all the engagement through LSPs. I do not have the number in front of me, but a not inconsiderable number of LSPs are chaired by the business community. We are in a different situation. We are not about threatening businesses. For all those reasons, I hope that the noble Lord will feel able not to press his amendment. However, I am not sure that I have moved him sufficiently on this matter.
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Lord Tope: My Lords, I thank the Minister for his attempts to move me, at least. I remember with nostalgia the days before NNDR, when we did not have to have a consultation with business rate payers. That was made statutory as soon as local authorities had no say whatever over the level of rate, which always seemed to me somewhat bizarre and, to them, even more pointless. However, I digress.
As the Minister said, we have covered fairly exhaustively all the points in this debate, but I should just like to comment on where we have got to. The Minister spent part of his speech taking issue with the use of the word "threat". I understand why, and in a way I very much share his view, but the fact that that word came from, if I may say so, another friend of the Bill-a qualified friend but a friend none the less-is an exact illustration of my point that we need to provide reassurance for businesses in statute. The language should reflect the way that they feel about this and there is a need for reassurance.
Should the vote be mandatory? That is the thrust of my amendment and it is what I believe should happen. As the noble Lord, Lord Bates, pointed out, we are not talking here about every small business that happens to have a business premises or a huge exercise involving balloting every NNDR payer. I took the trouble to find out how many business rate payers would be affected in my own London borough. It is a smallish, outer London borough. It is not a huge centre of business but it has a fair number of businesses. In the London Borough of Sutton, 429 businesses would require to be balloted. I recognise that my local authority would not want to be engaged in something completely disproportionate but, on the other hand, we need to be clear and to understand that we are not talking about a huge, complex and vastly expensive exercise involving a ballot of a large number of people. As I said, in a borough with a little over 4,000 NNDR payers, we are talking about 10 per cent, which I understand to be fairly typical across the country.
I want to ask the House to agree to my Motion. If it is agreed, no doubt there will be further discussions. That was the tenor of what I was saying and, for the reasons that I have stated, I should like to test the opinion of the House.
3.52 pm
Contents 122; Not-Contents 127.
Addington, L.
Allenby of Megiddo, V.
Alliance, L.
Anelay of St Johns, B.
Ashcroft, L.
Astor of Hever, L.
Avebury, L.
Baker of Dorking, L.
Bates, L.
Bradshaw, L.
Brittan of Spennithorne, L.
Brooke of Sutton Mandeville, L.
Brougham and Vaux, L.
Buscombe, B.
Butler-Sloss, B.
Caithness, E.
Carlile of Berriew, L.
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Chidgey, L.
Clement-Jones, L.
Colwyn, L.
Cope of Berkeley, L.
Cotter, L.
Craigavon, V.
Crickhowell, L.
De Mauley, L.
Dholakia, L.
Dixon-Smith, L.
Eccles, V.
Elliott of Morpeth, L.
Falkland, V.
Falkner of Margravine, B.
Fearn, L.
Finlay of Llandaff, B.
Freeman, L.
Freud, L.
Garden of Frognal, B.
Geddes, L.
Glentoran, L.
Goodhart, L.
Goodlad, L.
Greengross, B.
Hamilton of Epsom, L.
Hanham, B.
Harris of Richmond, B.
Henley, L.
Hodgson of Astley Abbotts, L.
Howe, E.
Howe of Idlicote, B.
Howell of Guildford, L.
Hunt of Wirral, L.
Jenkin of Roding, L.
Jones of Cheltenham, L.
Kingsland, L.
Knight of Collingtree, B.
Laird, L.
Lawson of Blaby, L.
Lee of Trafford, L.
Luke, L.
Lyell, L.
Lyell of Markyate, L.
McAlpine of West Green, L.
McColl of Dulwich, L.
Maclennan of Rogart, L.
McNally, L.
Mayhew of Twysden, L.
Methuen, L.
Miller of Chilthorne Domer, B.
Montgomery of Alamein, V.
Morris of Bolton, B.
Neuberger, B.
Neville-Jones, B.
Newby, L.
Nicholson of Winterbourne, B.
Noakes, B.
Northover, B.
Norton of Louth, L.
O'Cathain, B.
Palmer, L.
Pearson of Rannoch, L.
Perry of Southwark, B.
Pilkington of Oxenford, L.
Plumb, L.
Quirk, L.
Ramsbotham, L.
Rawlings, B.
Razzall, L.
Redesdale, L.
Roberts of Conwy, L.
Roberts of Llandudno, L.
Rodgers of Quarry Bank, L.
Sanderson of Bowden, L.
Scott of Needham Market, B.
Seccombe, B. [Teller]
Selborne, E.
Sharp of Guildford, B.
Sharples, B.
Shaw of Northstead, L.
Sheikh, L.
Shutt of Greetland, L. [Teller]
Slim, V.
Smith of Clifton, L.
Stevens of Ludgate, L.
Stoddart of Swindon, L.
Swinfen, L.
Taverne, L.
Taylor of Holbeach, L.
Thomas of Walliswood, B.
Thomas of Winchester, B.
Tonge, B.
Tope, L.
Tordoff, L.
Trimble, L.
Trumpington, B.
Valentine, B.
Verma, B.
Waddington, L.
Wallace of Saltaire, L.
Walpole, L.
Warsi, B.
Wilcox, B.
Williamson of Horton, L.
Ahmed, L.
Anderson of Swansea, L.
Andrews, B.
Archer of Sandwell, L.
Bach, L.
Barnett, L.
Bassam of Brighton, L. [Teller]
Berkeley, L.
Bernstein of Craigweil, L.
Bew, L.
Blood, B.
Boothroyd, B.
Borrie, L.
Bragg, L.
Brett, L.
Broers, L.
Brooke of Alverthorpe, L.
Brookman, L.
Campbell of Surbiton, B.
Campbell-Savours, L.
Carter of Barnes, L.
Carter of Coles, L.
Chorley, L.
Christopher, L.
Clark of Windermere, L.
Clarke of Hampstead, L.
Clinton-Davis, L.
Cobbold, L.
Crawley, B.
Darzi of Denham, L.
Davidson of Glen Clova, L.
Davies of Coity, L.
Davies of Oldham, L. [Teller]
Dean of Thornton-le-Fylde, B.
Desai, L.
D'Souza, B.
Eames, L.
Eatwell, L.
Elder, L.
Elis-Thomas, L.
29 Jun 2009 : Column 21
Evans of Temple Guiting, L.
Evans of Watford, L.
Farrington of Ribbleton, B.
Faulkner of Worcester, L.
Filkin, L.
Foulkes of Cumnock, L.
Gale, B.
Gibson of Market Rasen, B.
Giddens, L.
Golding, B.
Goldsmith, L.
Goudie, B.
Graham of Edmonton, L.
Gregson, L.
Grenfell, L.
Griffiths of Burry Port, L.
Harris of Haringey, L.
Hart of Chilton, L.
Haskel, L.
Henig, B.
Howarth of Breckland, B.
Howarth of Newport, L.
Howells of St. Davids, B.
Howie of Troon, L.
Hoyle, L.
Hughes of Woodside, L.
Hunt of Kings Heath, L.
Jay of Paddington, B.
Jones, L.
Jones of Whitchurch, B.
Judd, L.
King of West Bromwich, L.
Kingsmill, B.
Lea of Crondall, L.
Levy, L.
Listowel, E.
Lofthouse of Pontefract, L.
McDonagh, B.
McIntosh of Haringey, L.
Mackenzie of Framwellgate, L.
McKenzie of Luton, L.
Mandelson, L.
Massey of Darwen, B.
Meacher, B.
Morgan, L.
Morgan of Drefelin, B.
Morris of Aberavon, L.
Morris of Handsworth, L.
Morris of Manchester, L.
Moser, L.
Murphy, B.
Myners, L.
O'Neill of Clackmannan, L.
Patel, L.
Patel of Blackburn, L.
Pendry, L.
Pitkeathley, B.
Ponsonby of Shulbrede, L.
Quin, B.
Ramsay of Cartvale, B.
Rendell of Babergh, B.
Richard, L.
Rogan, L.
Rosser, L.
Royall of Blaisdon, B.
Scotland of Asthal, B.
Sheldon, L.
Simon, V.
Stone of Blackheath, L.
Strabolgi, L.
Symons of Vernham Dean, B.
Taylor of Bolton, B.
Temple-Morris, L.
Tenby, V.
Tomlinson, L.
Tunnicliffe, L.
Turner of Camden, B.
Uddin, B.
Wall of New Barnet, B.
Warnock, B.
Warwick of Undercliffe, B.
Whitaker, B.
Whitty, L.
Williams of Elvel, L.
Woolmer of Leeds, L.
Young of Hornsey, B.
4.03 pm
That this House do not insist on its Amendments 11 and 12 to which the Commons have disagreed for their Reasons 11A and 12A.
Lord McKenzie of Luton: My Lords, Amendments 11 and 12 were the subject of a comprehensive debate in this House on Report. They were intended to prevent BRS liability increasing retrospectively where a rating list is amended with effect from an earlier day. Members across the House set out their positions and there was a debate about the situation in some ports, where backdated rates bills have been issued. For the Government, my noble friend Lord Davies of Oldham described the key issue of principle; that is, it is right that businesses will be asked to pay the BRS due on their property and to pay at the correct level. My noble friend argued that the alternative is a situation where we have businesses occupying properties at the same rateable value being liable for different bills.
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After it was accepted by this House that the amendments will return to the other place for consideration, there was a further lengthy debate on the principle of the amendments. Members from across the House put their positions both in relation to the amendments and the wider issues that they reflect. On Division, the other place voted to reject the amendments.
My honourable friend, the then Minister Sarah McCarthy-Fry, reminded the other place that BRS builds on the non-domestic rating system. She said that rating lists can be changed by valuation officers to ensure accuracy and, with that, the accuracy of rates liability. Sometimes this can lead to backdated increases in rates liability; sometimes it can lead to backdated decreases and, therefore, refunds. She acknowledged that there is the possibility of backdated increases in rateable value causing higher BRS bills than businesses were anticipating. However, the practicalities involved in ascertaining the need for changes to a rating list and then establishing what change is required mean backdating is an essential part of the normal functioning of the system. That is why the Government consider it should apply to non-domestic rates and to BRS equally.
The principle of these amendments has been debated fully in this House and in the other place. However, as noble Lords are aware, the Speaker of the other place designated the amendments as infringing financial privilege. As a consequence, the message that has been sent to this House is that the reason the amendments have been rejected is that they affect the levy of local revenue. In those circumstances, as noble Lords are aware, this House cannot insist on its amendments and, bearing that in mind, I beg to move that the House does not insist on Amendments 11 and 12.
Lord Bates: My Lords, I cannot welcome that statement from the Minister. I appreciate that he is reading the advice he was given from on high, but it is a shameful way to treat the opinion of this House on a matter that is of profound interest to many businesses in this country. We need to put this in some context. Many businesses are today laying off people or making them redundant not as a result of external trading conditions, the banks or the recession, but of this Government's action in not agreeing to this amendment, which was sent to the other place.
My remarks to the Minister will cover three topics: first, the technical issue of privilege and whether it relevant in this case; secondly, the history of this amendment; and, thirdly-however uncomfortable the reminder may be to him-the impact that this is having on the many businesses that have written to the Minister and to me to draw attention to it.
In the other place, it was pointed out that the amendment is not to do with financial privilege. The wording of the reason is:
"Because it would affect the levy of local revenue, and the Commons do not offer any further Reason, trusting that this Reason may be deemed sufficient".
The answer to that is that this amendment "could", not "would", affect the levy of local revenue if the Valuation Office Agency, as a result of a cataclysmic series of errors and mistakes, did not place on the list businesses that should have been valued, revalued and placed on it. It could have an impact. However, to say that it would have an impact is disingenuous.
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Clause 16 already states that where there is an error on the part of the Valuation Office Agency, there should be no retrospective element in non-domestic rates. Our amendment simply continues that principle into the current legislation. That is what is done by an amendment that was passed in this House by a majority of 60. It has nothing to do with financial privilege. We are not costing any money, but rather making sure that a piece of legislation brought forward by Her Majesty's Government is consistent with other legislation brought forward by them on previous occasions. The other place should have acknowledged that, rather than hiding behind a draconian 17th-century technical measure to block further debate on an issue that is causing suffering and hardship to businesses in this country.
The noble Lord, Lord Mandelson, who seems to wield ever-growing influence in the Government, said on 14 January 2009:
"UK companies are the lifeblood of the economy and it is crucial that government acts now to provide real help to support to them through the downturn and see them emerge stronger on the other side".
With this measure, he does not have to go to the £10 or £20 billion guarantee, or the £5 billion support stimulus package. He merely has to not backdate a measure that should not have been backdated in the first place. That is what we are asking for. It is completely within the gift of the noble Lord, Lord Mandelson, to do this.
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