Clause 1 — Power to impose a BRS
Oral Answers to Questions — Prime Minister
Bob Neill (Shadow Minister, Communities and Local Government; Bromley and Chislehurst, Conservative)
This is the first time that I have had the pleasure of doing business on local government issues with the Minister. As a member of a shadow team that has been in place a little longer than the Government team, I welcome her to her new post, and look forward to doing further business in the future.
I am sorry that we will have to start on a note of disagreement, but such is life. The Minister has set out much the same arguments in resisting the Lords amendments as Government spokesmen used in the other place. Their lordships were not convinced, and with every respect to the Minister's persuasive skills, I have to say that I am not either.
The key issue is that if the BRS is to be successful, it has to have wholehearted buy-in from, and the consent of, the business community, otherwise it will not achieve the stated objectives. It is well known—I repeat this point merely for the record, without elaborating on it—that the official Opposition would not have introduced a BRS at this time in an economic cycle, in the midst of a recession; the only exception in our case was the Crossrail project. That point has been well rehearsed and well debated, but I mention it to set the context. At a time when businesses are under more pressure than ever, the introduction of BRS—and without a ballot—would in our judgment be an unjustified and unduly onerous imposition on them. Businesses are already struggling; they are finding cash flow ever more difficult, and the costs of borrowing money to meet cash flow and other requirements are ever higher.
It is also important to remember that their lordships rightly debated this change not in isolation, but in the context of BRS together with other potential burdens on businesses. If we add in the cumulative burdens of a revaluation of the standard, ordinary business rate, never mind the BRS, and the possibility of extra parking charges and other levies, we see that there is a danger of the straw breaking the camel's back. That is why it seems to us that if there are to be BRS projects, it is only right and fair that businesses should have a chance to vote on that; otherwise, they will be caught in the invidious position of having a form of taxation without representation.
We will in due course move on to discuss amendments in relation to what are called joint BRS-BID levies. The only reason why I mention that at this stage is to own up to being a convert to BIDs. I was sceptical about them when they were first introduced, but I am now persuaded that they can be very successful. There is a key difference, however, in that for BIDs there is always a ballot of the businesses that are going to participate. That is an important lock in terms of both accountability and improving the scheme. That is not just the view of politicians. When the Bill was previously before this House, the Committee conducted some useful pre-legislative scrutiny evidence sessions. The evidence from the various business organisations was overwhelmingly to the effect that, whatever their views about introducing a BRS scheme at this stage in a recession, if there was to be added value it was crucial that there should be a mandatory ballot.
That point was made by a number of highly experienced Lords in the other place, and it has been reinforced by the CBI very recently. I previously asked the Minister about a letter from Richard Lambert, the director general of the CBI, to the new Secretary of State. In the context of the amendments, Richard Lambert states:
"You will not be surprised to hear that the CBI welcomes these changes. In 2007 the six hundred businesses that make up the CBI's nine English regional councils agreed that CBI should support the principle of business rate supplements."
They are not coming at that from a Conservative party political point of view; I disagree with them on that particular issue of principle. The letter goes on to state, however:
"They felt that if there is a need for new local infrastructure businesses should be able to contribute, where they see real value. However, there was overwhelming belief that this would only be acceptable if businesses had the safeguard of a mandatory ballot. This would ensure that supplements were affordable and only used for projects that would genuinely stimulate local economic activity."
In relation to the Lords amendments that we are debating, the letter states:
"In its amended form the Bill provides far more certainty for businesses about their long-term rate liabilities, whilst still enabling local authorities and business to work together to fund and deliver new infrastructure projects. In the current recessionary climate such improved certainty is absolutely essential. Government now has a real opportunity to demonstrate its commitment to helping businesses by allowing the changes voted through in the House of Lords to remain a part of the Bill".
I could not have put it any better. That is a persuasive case from the CBI, representing thousands of businesses, and it looks as if the Government are persistently turning a deaf ear to those arguments.
Certainty certainly relates to funding streams, but there must also be certainty for the businesses that are going to have to pay. The limit of 30 per cent. is in every respect an arbitrary one, because it is a question not just of the percentage that is funded, but of the amount that will fall to be paid by individual businesses. As has rightly been said, the nature of BRS schemes can vary. Some will be large, and some small, but as the Minister interestingly, and I suspect correctly, said, many involve significant capital expenditure. Even 20 per cent. of a very large scheme is a significant potential burden on businesses at a time when they can ill afford such cost burdens. That point appears to be missed.
I am sorry to have to say that the Government are also unwilling to seek greater business involvement. On Report in this House, there was a great deal of discussion about the possibility not only of having a safeguard for businesses through the mandatory ballot, but of mechanisms to ensure their greater participation in the development and ongoing oversight of BRS schemes. Ministers—previous Ministers, I hasten to add—uttered warm words about that. They said they would look at it, but nothing has emerged. I hope it may yet do so, but that does not give us much confidence that the Minister's words about wanting to encourage participation between local government and business are actually going to be met with action.
That is a profoundly disappointing stance for the Government to take, so it is important to set in place greater certainty for business than the Lyons review set out, precisely because of the potential impacts on business. If a package had been developed that gave businesses greater safeguards, perhaps their lordships would have come to a different conclusion, but it has not been developed, and given the history of how this matter has been debated—we will come on to another piece of history in respect of a later group of amendments—I do not have confidence that warm words will be met with action.
Against that background, I am sorry to have to say that we have to maintain that the Government have misjudged the mood and misread the evidence, and that if they disagree with the Lords they will make the Bill worse than when it came back to this House from the other place. That will be a missed opportunity and a great let-down, and it will send precisely the wrong signals to businesses in this country at the current time.