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Business Rate Supplements Bill
9:45 am
Bob Neill (Shadow Minister, Communities and Local Government; Bromley and Chislehurst, Conservative)
Perhaps the Minister can help us with an issue regarding paragraph 3(2), and in particular 3(2)(a), on refunds and credits. I understand the concept behind the regulations, but this measure gives a permissive power for the regulations to provide, in effect, for a refund to the billing authorities. I do not have a problem with that, but I notice that the refund is referred to as being
“in equal proportions to each billing authority”.
I take it that that means exactly what it says, but is that always the fairest means of carrying out the refund?
Might it not be appropriate to consider a refund that does not involve equal shares across the board, but which is in proportion to the contribution that has been made by each billing authority? Let us say that there are five billing authorities in a BRS scheme. Depending on how the BID is constructed, some of the billing authorities may have put more into the pot than others. However, as I read the regulations, the refund would be split to give them each a fifth of any refund. However, one of those five authorities might have contributed 30 per cent. and another 40 per cent. of the revenue from businesses in their area, with the others contributing rather less. Should not provision for that be reflected in the regulations? Perhaps the same consideration ought to be given where a BRS covers more than one top-tier authority area. The aim is to have the extra flexibility needed to provide the just result in such cases.
Dan Rogerson (North Cornwall, Liberal Democrat)
The hon. Gentleman makes a good point. I can think of a number of counties where district or borough authorities are different sizes and have different concentrations of businesses communities that might be affected. I look forward to hearing the Minister’s response.
Philip Dunne (Whip, Whips; Ludlow, Conservative)
I seek your guidance, Mrs. Dean, on whether now is the appropriate point to raise an issue, because I could not find what seemed an appropriate moment anywhere else in the Bill. Please guide me properly if I stray out of order.
It is quite proper that the potentially large sums being raised for substantial projects over a prolonged period should be accounted for. The schedule sets the rules under which the accounting would work, but I see nothing in the Bill that identifies where the accounting information goes or the extent to which that is made public to either the levy payers or the citizens in the area who are subject to the scheme. In particular, there is nothing to show the progress relating to the expenditure of these sums or whether the project is on budget, according to the estimate made at the outset.
A lot of clauses refer to the preparatory phase and to setting up a levy, but there is little about monitoring the levy during the period of its operation until such time as a refund may apply—at the end of it. There seems to be a lacuna in the middle. Will the Minister say how that will be dealt with?
Brian Binley (Northampton South, Conservative)
I seek your guidance, too, Mrs. Dean, because the schedule deals with refunds and credits and I am concerned about the total lack of any comment about refunds to the taxpayer, should the estimate for a given project be over-generous and there is a surplus at the end of it. I see that refunds may be returned, but the schedule does not specify to whom they should be returned, other than mentioning the billing authority. Is this the correct time to mention that or should I mention it in the debate on clause 24, which also deals partly with this matter?
Brian Binley (Northampton South, Conservative)
Thank you, Mrs Dean.
The calculation of the cost of a given project sets the rate thereafter, irrespective of how long the project lasts. The whole thing will be framed, in terms of collection, and laid out in the initial prospectus. I understand that. However, I am concerned that Government projections are sometimes not as accurate as we would like them to be. I have heard that concern echoed even more loudly at local government level over the 12 years that I have been a county councillor. Will the Minister help us by explaining how we will have some control, other than by the measures set out in the schedules, over the efficacy of the accounting processes for the initial prospectus; and if the prospectus is totally wrong, how that money might be returned to the taxpayer, bearing in mind that some of the projects will carry on for some time?
Sadiq Khan (Parliamentary Under-Secretary (Community Cohension and Fire and Rescue Service), Department for Communities and Local Government; Tooting, Labour)
I thank all hon. Members who have spoken and will deal with each of their comments in turn by contextualising schedule 2.
The White Paper emphasised the importance of security and accountability to the business community to maximise the benefits of BRS. It will therefore be essential to have in place a robust set of accounting arrangements, and the Bill places certain requirements on the levying and billing authorities. As I said earlier, we will soon publish a consultation paper setting out our proposals for secondary legislation, including those for the accounting arrangements, and those will complement the Bill’s main provisions.
The hon. Member for Bromley and Chislehurst made a good point, as he often does—it pains me to say that—and clearly the example he gave applies not only to proportions in cities that we know about, such as London, but to different proportions outside London, which the hon. Member for North Cornwall also mentioned. That is one of the options that should and will be looked at during the consultation. The anal answer I can give him is that paragraph 3(1) gives us the general power and paragraph 3(2) is just a list of examples, but he makes a good point that we need to come back to along with other matters.
Levying authorities that impose a BRS must keep a BRS account for each one they operate. That will be similar to the BID revenue accounts that authorities are required to have for BIDs that are established in their areas. When the Greater London authority enters into an arrangement with one of its functional bodies, as set out in paragraph 3, that body will similarly be required to keep a BRS revenue account. If two or more levying authorities act jointly, each authority must have its own BRS revenue account to ensure appropriate transparency and accountability.
The hon. Member for Ludlow made an important point about transparency during the process and how people will be made aware of what is happening, and as I mentioned, we will shortly set out our proposals in a consultation paper. Local authority accounts, as he is aware, are open to the public. Although the prospectus sets out what to do in case of variations, I take his point about the need to see the work in progress and how things are going. That is one of the things that we hope to clarify during the consultation and receive comments about the best way of doing so. He is right to say that that is particularly relevant to BRS schemes, which by definition are long. As we know from long-term projects, there could be a rollercoaster ride and we need to ensure that key stakeholders are kept on side. One way of doing so is through transparency.
Philip Dunne (Whip, Whips; Ludlow, Conservative)
The Under-Secretary will recall from his time on the Public Accounts Committee, on which we have both served, that the primary scrutiny body for Parliament took the view that it would be appropriate, as with major projects, to review the performance of the Olympic Delivery Authority annually during construction for the Olympics. Perhaps an annual review should also be considered for projects such as Crossrail or other substantial projects subject to BRS.
Sadiq Khan (Parliamentary Under-Secretary (Community Cohension and Fire and Rescue Service), Department for Communities and Local Government; Tooting, Labour)
The hon. Gentleman knows, as I do, that the current Mayor is keen to have transparency, with all his laundry out in the open, so I have no doubt that the GLA, the Mayor, London MPs, the Government and businesses, whether corporations or those in Canary Wharf, will want to ensure transparency throughout the process. The example he gave from the PAC is a really good analogy, and he will be aware that the National Audit Office is identifying lessons to be learnt during the process, rather than just at the end. As we lead up to the Olympics, the NAO is looking at how money has been spent and whether it represents value for money. We would expect that sort of rigour to be applied to such a project because it involves money not only from BRS, but from general taxation, including money from Transport for London and voluntary contributions. His point is well made and needs to be addressed during consultation on the secondary legislation.
The Bill also provides for billing authorities, in the first instance, to pay BRS revenues into their collection fund, in the same way as they do council tax and non-domestic rate revenues. However, an important difference between NDR and BRS is that BRS revenue will not be paid into the central Government NDR pool, but will instead be retained locally and transferred to the levying authority. I know that the hon. Member for Northampton, South is concerned that central Government will somehow gobble up this locally raised money. That is unfair because the clause confirms that the money is retained locally, to be spent locally.
Brian Binley (Northampton South, Conservative)
The Under-Secretary of State misunderstands me. I have no concerns about central Government leeching some of this money away—he might be pleased to know that— and I am sure that is not the intention under the Bill. I am concerned first about accountability, particularly with long-term projects. Secondly, I am worried that money may be leeched away either at the billing level or at the levying authority level, used for other purposes and rather cleverly accounted for as part of the administrative cost. The final point was about refunds—to the taxpayer, not the billing authority—where an overestimation had been made in the initial prospectus.
Sadiq Khan (Parliamentary Under-Secretary (Community Cohension and Fire and Rescue Service), Department for Communities and Local Government; Tooting, Labour)
For the record, it was the hon. Gentleman who first used “leeching”, not me, but I will use “leeching” as a response to his introduction of the word. God forbid that central Government ever leeches from local councils or taxpayers.
I understand the hon. Gentleman’s concerns. The proposed secondary legislation governs accounting arrangements. It needs to cover, and will cover the following key areas: refunds to ratepayers of, for example, unspent BRS revenue; credits and debits to the BRS revenue account; handling of voluntary contributions; transfer of BRS revenue from the collection fund to the BRS revenue account; and surpluses and deficits of BRS. I take his point that we cannot have imaginative accounting processes, whereby items other than those that the Bill defines as administrative expenses are brought under that cover.