Clause 6
Business Rate Supplements Bill
Public Bill Committees, 27 January 2009, 4:15 pm
Daniel Rogerson (North Cornwall, Liberal Democrat)
I beg to move amendment 9, in clause 6, page 4, line 6, at end insert—
‘(d) any parish council in the affected area.’.
Peter Atkinson (Hexham, Conservative)
With this it will be convenient to discuss amendment 15, in clause 10, page 6, line 11, after ‘persons’, insert
‘as specified in section 6(1)’.
Daniel Rogerson (North Cornwall, Liberal Democrat)
Those members of the Committee who were privileged to serve on the Committee that considered Bill that became the Planning Act 2008—several are here today—may recall that I moved a similar amendment to that legislation. Parish councils should be explicitly mentioned in the Bill as consultees at crucial times.
It would be generally good practice to send out the signal that parish councils play a most important role in many parts of the country. Like the Minister, I have met representatives of the National Association of Local Councils, whose members are keen to have the opportunity to contribute to all such debates, and their views should be remembered. All levying and billing authorities have regular contact with their parish councils—at least, the good ones do—and there will be strong communication between them. It would send out the wrong signal were we to miss out the parish councils when considering such matters. We should give them the opportunity to comment on important prospectuses of the sort provided under the Bill.
As always, local government is changing. The hon. Member for Ludlow is no longer in his place, but his local authority of Shropshire, like mine, Wiltshire and Northumberland, is going through the process of becoming a unitary authority. Part of Cornwall’s bid was that the parish council’s role should be enhanced; as the district council tier disappeared, it was acknowledged that parish councils, especially the larger ones, would be important in ensuring that decisions were taken locally—a consideration that was agreed to.
As a Member with a constituency that includes 70 parish councils, I can say that their meetings play an important part in all decision making. The district councils, North Cornwall district council, Restormel borough council and Cornwall county council have a good record of co-operation. However, that is not necessarily a given. When such important decisions are being taken, it is necessary to underline the fact that local councils should have the opportunity to be involved.
Bob Neill (Shadow Minister, Communities and Local Government; Bromley & Chislehurst, Conservative)
I am impressed by the points made by the hon. Member for North Cornwall. Bromley does not have parish councils. I had the pleasure of serving on the Committee that considered the Local Government and Public Involvement in Health Act 2007, where I had some lengthy debates with the Minister about whether at some point in our history there might have been a parish council in Pratts Bottom. Thanks to that legislation there is one now. Pratts Bottom is adjacent to the Kent parish of Badgers Mount.
There is now a power to set up parish councils in London, so the right hon. Member for Greenwich and Woolwich and I might find that we have parish councils at some point and that they wish to be involved in the activities that flow from the Bill. Last weekend I happened to be in Wiltshire and had the chance to meet members of and candidates for the new unitary authority, along with some of its officers—the transition team. It is clear, and I take the point, that whatever one’s views, such bodies are a fait accompli in some parts of the world. There is clearly the scope and the desire across the political spectrum to give parishes and local councils an enhanced role in those structures, as you will know, Mr. Atkinson, from your experience in Northumberland, so it is timely to recognise their legitimate role. Hexham is an example of a town council that is probably involved with businesses in its area, so it has a legitimate locus in these matters. I hope that the Ministers will look favourably on an amendment that does not create onerous burdens, but opens up opportunities for those bodies in the current circumstances.
Sadiq Khan (Parliamentary Under-Secretary (Community Cohension and Fire and Rescue Service), Department for Communities and Local Government; Tooting, Labour)
The amendments would change the requirements on levying authorities to consult before introducing a BRS. The amendment moved by the hon. Member for North Cornwall would require authorities to consult parish councils. Before I deal with his argument, let me put his amendment in the context of the Bill.
The Bill requires local authorities in two-tier areas to consult their lower-tier authorities. Those are the district councils or, in London, the boroughs and the common council. In part, that is because those authorities will act as the billing authority for the supplement, alongside their existing role of collecting business rates more generally. The two tiers of government will also need to work together to ensure that the proposed project is consistent with other initiatives in the area.
As set out in the draft guidance for consultation published on 23 January, levying authorities will need to consider how their BRS fits with the sustainable communities strategy and the priorities set out in the local area agreement. As such, levying authorities will need to consider how the proposed project fits with the existing plans for the area. Clause 6(1) provides that levying authorities will need to consider consulting those who might be affected by the proposed project, over and above those who will be liable for the supplement and the lower-tier authorities in a two-tier area. That could include parish councils, as a levying authority will want to ensure that a proposed project is consistent with other plans for the local area. However, depending on the project, that might not always be appropriate and it should therefore be left to the discretion of the local authority, rather than being mandatory.
Amendment 15 would define “relevant persons” for the purposes of consultation on a proposal to vary a BRS under clause 10. Clause 10(5) makes it clear that when an authority consults on a proposal to vary a BRS, it should consult those who are liable for the supplement and those who will become liable should the variation go ahead. That is an important protection for taxpayers as it ensures that all those who will be liable for a BRS, either from the outset or because of a variation in an existing project, will have the opportunity to have their say. If the amendment were accepted, that protection would be lost, and I therefore ask the hon. Gentleman to withdraw his amendment.
Daniel Rogerson (North Cornwall, Liberal Democrat)
I am not having much luck convincing Ministers that relatively small changes, such as the provision for prospectuses which we debated under clause 5, are safe enough to include in the Bill. There seems to be a concern that they are radical changes that might blow things apart. They are not necessarily radical changes, but they are quite important in signalling the intention that these consultations, discussions and debates should be open and inclusive, to allow important organisations such as parish councils to contribute. I am somewhat disappointed that the Minister has again chosen not to accept the amendment. I would welcome any reassurance that, in the guidance and information coming out with the Bill, a reference will be made to local councils.
Sadiq Khan (Parliamentary Under-Secretary (Community Cohension and Fire and Rescue Service), Department for Communities and Local Government; Tooting, Labour)
I think I can give the hon. Gentleman the reassurance he seeks. All our consultations are genuine, but this one is even more so than normal—it is genuine squared. I understand that rural parts of the country have different needs to urban parts and that is one of the reasons for the flexibility. I take on board his concerns and we will see what the consultation over the next 12 weeks delivers.
Daniel Rogerson (North Cornwall, Liberal Democrat)
I am grateful to the hon. Gentleman. The Government have clearly acknowledged that local councils play an important part in many areas of the country. Our debate the amendment underlines our recognition of that fact. I will not press the amendment to a vote, as to do so would delay the Committee to no great purpose. However, it is important that we have the debate and that local councils know that we are aware of their existence and the important role they play. I beg to ask leave to withdraw the amendment.
Peter Atkinson (Hexham, Conservative)
With this it will be convenient to discuss the following: amendment 19, in clause 24, page 15, line 8, leave out ‘thinks’ and insert ‘can demonstrate’.
Amendment 34, in clause 24, page 15, line 8, leave out ‘thinks’ and insert ‘considers’.
Bob Neill (Shadow Minister, Communities and Local Government; Bromley & Chislehurst, Conservative)
Amendments 26 and 34 will, I hope, not be regarded as the product of a mind too long exposed to legal textbooks. They were tabled to probe the Government’s intentions. It strikes me that, in this context, the use of “think” might jar, so the amendment replaces it with “considers”. The relevant part of the subsection states:
“For the purpose of subsection (1)(c), a levying authority must, in particular, think whether it would be appropriate to consult persons who the authority thinks might become liable to pay a chargeable amount”.
Leaving aside the fact that if we were playing “Just a Minute” we would lose a point for having two “thinks” in the same sentence, the wording implies that the authority must go through a thought process which ought to be of a fairly considered nature and ought to involve a measure of weighing of evidence and judgment. It seems to me that in that context, as in clause 24, to which amendment 34 relates, “considers” is perhaps the more appropriate word, not least because it might be that if a body with a legitimate interest felt that there had not been appropriate thought or consideration given, they might seek remedies elsewhere. “Considers” is often used in such a context to imply a rational and dispassionate way of weighing options and coming to a conclusion. It seems that the requirement is that the local authority should come to a conclusion about the class of persons referred to, so “consider” is therefore a better word.
Put another way, one can conceive of circumstances where “think” can suggest a process that is not an entirely rational, objective or quasi-judicial in nature. One can have an irrational thought and one can have an unreasonable thought. One would hope that a local authority, in this context—[Interruption.]
Nick Raynsford (Greenwich & Woolwich, Labour)
The hon. Gentleman has got me thinking—or perhaps considering. What were the reasons for him choosing to substitute “think” in line 21 with “consider”, but to leave “thinks” in line 22 and not substitute “considers”? What thought process led him to the conclusion that the Bill would be improved by his doing it one way around rather than the other?
Bob Neill (Shadow Minister, Communities and Local Government; Bromley & Chislehurst, Conservative)
First, it seemed to me that it might be more elegant to have two different words within the same clause—I know that the right hon. Gentleman likes to see elegance in all things. Secondly, two different considerations seemed to be implied. The second “think” is the trigger for the authority—it thinks persons might become liable to the charge but, once it has thought that, it then has to go through a process of consideration. That is implied at the beginning of subsection (1)(c). There are two subtly, but perhaps importantly, different thought processes. The use of “consider” recognises the subtle difference more appropriately and would improve the wording.
Daniel Rogerson (North Cornwall, Liberal Democrat)
Amendment 19, which stands in my name, refers to a later clause, but deals with a similar issue—a clear indication that the use of any power requires a little more than some thought.
Clause 24, which talks about a power for a national authority to cancel a BRS. The thought or consideration—whether it is rational or irrational—behind amendment 19 is to ensure that if the Government or any of the national authorities in England or Wales seek to intervene or to act in such a draconian way against a local community which, with its business organisations and representatives, has chosen to move forward on a BRS, they must do so on the basis of some great problem with the BRS, and not because they just happen to be concerned for some reason about one or two aspects of the project involved.
Like the hon. Member for Bromley and Chislehurst, I seek a slight change. Unlike him, I have not had great exposure to legal textbooks. I am sure that I am all the poorer for that, although at the same time I cannot help but feel a bit grateful. I hope that the Minister is able to see the thought or consideration behind the amendment—that there should be a need for a national authority, if it is to act in such a way, to demonstrate that there is a big problem.
Philip Dunne (Whip, Whips; Ludlow, Conservative)
It may seem strange to rise on a point that, on first sight, appears to be somewhat obtuse. Having said that, we should remember when we draft legislation that the language we use will govern the conduct of local authorities for years if not decades to come and it needs to be as precise as possible.
I have considerable difficulty with repeated use of “think”. I have served on a local authority and I know the processes involved in arriving at decisions when such subjective language is left in legislation. It is possible for an authority’s view to be determined through a process of discussion and, if necessary, vote-taking in a council chamber or committee. “Consider” or “demonstrate” imply that a process has been followed appropriately by the authority, whereas “think” is capable of interpretation by a layman such as I. I do not have the benefit of my hon. Friend’s exposure to interpretation of legislation, and we are merely here to assist Ministers in drafting it, but using more precise language, which implies that a process has been gone through rather than just thought about, would seem to me to be more appropriate. I hope that the Minister will reflect on that and recognise that none of the amendments is contentious and they could, therefore, be accepted.
Sadiq Khan (Parliamentary Under-Secretary (Community Cohension and Fire and Rescue Service), Department for Communities and Local Government; Tooting, Labour)
I am sure that I speak for the hon. Member for Bromley and Chislehurst, but we do not hold a lack of legal experience against the hon. Members for Ludlow and for North Cornwall.
At the core of the amendments are the relative definitions and strength of “think” versus “consider”, which is the nub of the matter affecting clauses 6 and 24. I shall discuss the effect of each amendment in turn. Amendment 26 to clause 6 would require levying authorities to consult on their BRS proposals. Those consulted would be those liable to pay the BRS, lower-tier authorities in two-tier authorities and other such persons as the levying authority thinks appropriate. Clause 6(5) requires a levying authority in particular to
“think whether it would appropriate to consult persons who the authority thinks might become liable to pay”
the BRS before the end of its chargeable period. When I practised law, I was always in favour of using plain English, not legalese and gobbledegook, where possible. However, with respect, this provision is not the best example of either that hon. Members could bring up. I shall explain why in a moment.
Amendment 19, tabled by the hon. Member for North Cornwall, and amendment 34, would affect clause 24, on to which I am sure we shall come later in proceedings. The amendments would replace “think” in the test of whether the Secretary of State or Welsh Minister should exercise their powers to intervene on or even cancel a BRS. Amendment 26, in the name of the hon. Member for Bromley and Chislehurst, would change “think” to “consider”, which he said implied greater analysis—I think that I have followed the core reasons for his amendment. However, in truth, the amendment would have no effect. As public authorities, local authorities must reach their decisions in a reasonable and rational way, taking account of all relevant information. That includes decisions on whom to consult, where that decision is left to the local authority. In that context, there is no substantive difference between “think” and “consider”. My right hon. Friend the Member for Greenwich and Woolwich demonstrated the reason why there is no real difference—the fact that a change has been proposed to one part of the clause and not another. That proves the point.
Under clause 24, the Secretary of State and Welsh Ministers must also reach their decisions in a reasonable and rational way, taking account of all relevant information. In that context, there is no substantive difference between “think” and “consider”. However, I value and endorse the point that there should be greater analysis—whether by the Secretary of State or local authorities—of an issue when deciding whom to consult or whether to intervene in a BRS. It is only right that all parties involved in a BRS treat seriously the project and proposed supplement. However, on the basis of the substantive effects of the amendments, as I have explained, I hope that the hon. Gentleman will withdraw his amendment.
Bob Neill (Shadow Minister, Communities and Local Government; Bromley & Chislehurst, Conservative)
I have applied my mind to the Minister’s response. I ascertained his point and understand what he seeks to achieve. I am reassured to a degree on this serious point. He rightly stated that the exercise of the powers in the Bill should be proof against judicial review and meet the standard of the Associated Provincial Picture Houses v. Wednesbury Corporation case. We want to ensure wording that achieves that. I am fortified by the thought of the principle that others can refer to debates in this Chamber when seeking to ascertain Parliament’s intention. Having got on the record the standard that the Minister anticipates and intends that local authorities should attain, I beg to ask leave to withdraw the amendment.
Mark Field (Cities of London & Westminster, Conservative)
I will only detain the Committee very briefly. I have just received from one of my two local authorities—the City of London Corporation—a list of suggested amendments, and I wish to touch briefly on a matter relevant to clause 6: the situation whereby the results of revaluation become known after the initial consultation on a BRS proposal, with the result that properties that were previously below the threshold set in clause 12 move into that chargeable band. I hope that the Minister can give me some guidance, because, as he is well aware, the current revaluation will affect those who are liable to pay BRS. Property values are likely to move in both directions, taking properties in and out of the charge as they cross the threshold, and it is possible that one is slightly less concerned about those that move outside the charge.
The result of the revaluation in London is not due until September. On a highly practical matter, of which I know the Minister is aware, all the London boroughs will have a tight schedule in which to undertake the necessary work for the consultation on, and introduction of, the BRS, so that they meet the proposed timetable in London for Crossrail. It may therefore be necessary to start the consultation before the results of the revaluation are known. Does the Minister feel that it would be satisfactory to have a supplementary, late consultation and to adjust the revised prospectus if it has been issued?
The tight time frame is in part a belt-and-braces concern from the CLC, but there is a concern that the consultation process may start under the terms of clause 6, yet, by the time that the revaluation has taken place, there may be other properties and property owners who should have been part and parcel of it.
Nick Raynsford (Greenwich & Woolwich, Labour)
Subsection (5) imposes an obligation on authorities to think
“whether it would be appropriate to consult persons who the authority thinks might become liable to pay a chargeable amount before the end of the chargeable period”.
I should have thought that that gave an authority the opportunity to consider its overall evaluation schedules, to anticipate whether businesses that are currently below the £50,000 threshold might fall within it at a future revaluation, and, in the interests of safety, to draw the net a little wider in its consultation to avoid the scenario that the hon. Gentleman anticipates. Does he not feel that that provides us with the necessary safeguard?
Mark Field (Cities of London & Westminster, Conservative)
I accept what the right hon. Gentleman says. It is a certain safeguard, but I simply wanted to put the point on the record, and, for the purposes of the ministerial guidance that is published, to alert people, particularly given the fact that we will need a rapid procedure to get Crossrail up and running,. Nothing would be worse than if elements of the consultation were to be subject to a legal challenge by a disaffected property owner or occupier who suddenly found themselves liable for BRS but had not been consulted.
The right hon. Gentleman is right to say that subsection (5) goes some way to meet the CLC’s concerns. I make my point simply to alert people to the fact that the revaluation may be more comprehensive than we thought, and I should just like some guidance on the matter from the Minister.
Sadiq Khan (Parliamentary Under-Secretary (Community Cohension and Fire and Rescue Service), Department for Communities and Local Government; Tooting, Labour)
I commend the hon. Gentleman on raising an issue that is important to his constituents and to businesses in his patch. We are alive to the strict timelines, and one reason why we were keen for the Bill to make progress was to ensure that it could meet the Mayor’s timelines, notwithstanding the revaluation.
The clause sets out those whom levying authorities must consult before introducing a business rate supplement, as my right hon. Friend the Member for Greenwich and Woolwich said. The consultation will provide an important opportunity for local businesses to scrutinise the proposal and to have their say, including making the point about a possible revaluation. We expect local authorities in practice to develop their prospectus with key business stakeholders, but the clause places a statutory duty on them to consult formally all those liable for the proposed BRS. That is reinforced by the draft statutory guidance that we talked about earlier, which again makes the point that local authorities should consider how they will involve businesses in developing proposals prior to the formal consultation. As such, the prospectus and the business case will benefit from their expertise.
Subsection (1) states that before a levying authority can introduce a BRS, it must consult those who will be liable to pay the supplement. That includes anyone whom the authority thinks, based on its proposal, will be liable to pay the BRS from the day on which the supplement is introduced. That is the important point. The authority will also have a duty to consult anyone whom it considers would have been liable to pay the BRS on the day that it was introduced had they not been receiving 100 per cent. relief from the BRS as a consequence of receiving 100 per cent. relief from paying business rates. Authorities are also required to consult any ratepayer who is likely to become liable for the supplement on the basis that their current exemption from the BRS is likely to cease. For example, if BID levies are to be offset against BRS liability, a ratepayer who is not liable for the supplement when the BRS is first introduced might become liable when the BID is complete.
As well as providing for consultation with those who will be liable for the supplement, subsection (1) provides that levying authorities must consult those individuals or groups whom they consider appropriate who might reasonably be expected to be interested in their proposals. In two-tier areas, they must also consult the lower-tier authorities. Subsection (5) provides that levying authorities must also consider whether it is appropriate to consult anyone who is not liable for the BRS at the outset but might become so: for example, ratepayers whose properties have a rateable value approaching £50,000.
Subsection (6) places a duty on levying authorities to revise the prospectus in the light of the consultation if they think it appropriate to do so. In particular, they must consider doing so if the consultation results in significant changes or amendments to the proposal. The duty will be particularly relevant if any changes to the proposed BRS mean that it will support more than a third of the cost of the project, which will require a ballot.
Whether or not a revised prospectus needs to be published will depend on specific local circumstances, so the decision to publish a revised prospectus will rest with the levying authority. The clause ensures that no BRS will be solely the work of the local authority. Local businesses will always be consulted and be part of the BRS process.
As I said in my introduction—I commend the hon. Member for Cities of London and Westminster for making this point—the draft evaluation list for a 2010 start after revaluation will be published by 1 October 2009. I commend the clause to the Committee.