Peter Atkinson (Hexham, Conservative)

I remind the Committee that with this we are discussing amendment 21, in clause 24, page 15, line 21, leave out paragraphs (b) to (d).

John Healey (Minister of State (Local Government), Department for Communities and Local Government; Wentworth, Labour)

Welcome back to the Chair, Mr. Atkinson. I also welcome members of the Committee back to the Bill scrutiny proceedings.

I was not certain whether the hon. Member for Northampton, South had finished his intervention when we adjourned last Thursday, but I have checked the record and it appears that he had. I get the hon. Gentleman’s point—I get it every time he makes it—and he will find that there is provision, particularly in the guidance, for encouraging local authorities to deal with businesses that have a particular interest in a project’s success throughout its delivery life, not just during the period leading up to the potential introduction of a business rate supplement that helps to pay for it.

The hon. Member for North Cornwall explained that amendment 20 would require the Secretary of State to give directions that provide refunds to ratepayers in areas where she exercises her power to cancel a BRS, but I think he understands that the Bill already gives the Secretary of State the power to do that. The Bill therefore clearly contains the principle that that may well be the appropriate and right thing for the Secretary of State to do.

My concern about the amendments is that there could be wide-ranging consequences , probably unintended by the hon. Gentleman. The principal risk is that the Secretary of State would find it more difficult to exercise her power to cancel if refunds were required and automatically followed, whatever the financial consequences for the local authority and whatever stage a project and payments under a BRS had reached. The provision is therefore designed to ensure that there are safeguards that acknowledge the concerns that the hon. Gentleman and other right hon. and hon. Members have voiced on behalf of business interests, as well as the practicalities for local authorities and ratepayers.

The Secretary of State has to balance those issues as part of her job and she owes public law duties not only to ratepayers, but to local authorities. If the amendment were made and there were an automatic right to full refunds of all amounts paid, it could prove in practice more difficult to cancel a BRS in a reasonable way.

Daniel Rogerson (North Cornwall, Liberal Democrat)

I am grateful to the Minister for the way he has considered the intention behind my amendment. The principle that I wish to stress is that available surplus moneys—moneys that have not been spent up to the point at which a scheme fails or draws to a halt, or the Secretary of State needs to intervene to force that to happen—could be paid back, rather than moneys that have already been spent up to that point being refunded. It is clearly not my intention to penalise a local authority’s taxpayers for liabilities that have already been incurred, but I would prefer that any surplus moneys available be sent back, rather than sit in an account and used for some other purpose.

John Healey (Minister of State (Local Government), Department for Communities and Local Government; Wentworth, Labour)

I am grateful to the hon. Gentleman for that clarification of his intent, but it is not entirely captured in his amendment, which is what I am addressing. The power and principle that any surplus funds could be directed towards refunds are clearly established in the Bill. By taking away the Secretary of State’s power to act in a way appropriate to particular circumstances that are impossible to anticipate in detail from our vantage point, the amendment could have the unintended consequence of reducing some of the protection that the hon. Gentleman would like for the interests of businesses that he wants to promote. It might create further difficulties and make those consequences wider ranging if the refund was automatic in the event of any BRS cancellation.

The clause also provides the Secretary of State with a power to take a number of steps before a full-blown cancellation of a BRS—including refunds of surpluses or refunds without a cancellation—so that the potential for a refund does not depend on the cancellation of a BRS. My right hon. Friend the Member for Greenwich and Woolwich was understandably concerned about that, as it has the potential be an almost nuclear power. He was concerned that it might be used not in a measured way, but to remove a BRS at some point in the future.

I accept the point that the phrase in the clause, “materially inconsistent” with the prospectus, is not defined, but it means that a levying authority has made more than a minor deviation from the terms of its prospectus. If, when the project was undertaken, the levying authority did something extra that had a relatively  small effect on the cost, but no effect on the level of the BRS, it is very unlikely that that would be considered materially inconsistent and that it would be sufficiently strong grounds for the Secretary of State to consider a full-blown cancellation of the BRS. However, if a levying authority diverted revenue from the BRS from one project to another, clearly that might be materially inconsistent. From the Committee’s point of view, at this stage, any sort of judgment on intervention, including cancellation, would be based on a test of fact and a test of degree.

Nick Raynsford (Greenwich & Woolwich, Labour)

I am grateful for my right hon. Friend’s explanation of the way in which the phrase “materially inconsistent” is likely to be interpreted in practice. The worry that I expressed in our last sitting was that subsection (2)(c) may relate to information provided in the course of consultation. I gave the example of what might be said by a council officer during a consultation, which could then be used by those unsympathetic to a BID to seek perhaps even judicial review, on the ground that something was said that was materially inconsistent with the objectives, even if that had not been confirmed in writing. I do not want to push that point too hard, but I am nervous. I hope that my right hon. Friend will reflect on whether the phrasing is appropriate to ensure his objective, to which I entirely subscribe, or whether there might be loopholes.

John Healey (Minister of State (Local Government), Department for Communities and Local Government; Wentworth, Labour)

I am grateful to my right hon. Friend for not wishing to press the point too hard. He does not need to because I will move on to that. Having dealt with the bigger context and what are likely to be the core tests in the individual circumstances which any Secretary of State might need to bring to bear, I take the point that he has raised regarding subsection (2)(c) and will consider it further. If I conclude that any clarification is necessary, either in the legislation or in the guidance, I will provide it, but I am grateful to him for raising the matter.

In summary, there are a number of other steps short of the cancellation of a BRS that the Secretary of State could take if she believes that there is a material inconsistency in relation to a BRS and its use. The clause allows the appropriate flexibility for action in specific circumstances and, of course, there will be a range of levels of intervention, as hon. Members will be aware, short of the Secretary of State having to step in if there is concern or evidence that a local authority is going off track in its use of the BRS. Those are generally the established support and intervention powers that are available to local and central Government in a wide range of circumstances.

I hope that my remarks have been helpful to the Committee and that the hon. Member for North Cornwall will not need to press amendment 20. I commend the clause to the Committee and I hope that hon. Members will allow it to stand part of the Bill.

Daniel Rogerson (North Cornwall, Liberal Democrat)

I welcome you to another morning’s entertainment watching our deliberations from the Chair, Mr. Atkinson.

I do not intend to press the amendments to the vote. I am somewhat reassured by the Minister’s saying that flexibility is not an indication that money would not be  returned to bill payers as a matter of course and that the aim would be to return it wherever possible, although there might be occasions when that would not be appropriate. I am sure that the matter will receive further consideration—perhaps the other place will want to consider it, unencumbered by any interests.

I hope that the Minister has taken on board the Opposition’s concerns about possible problems were money to be held back following the cancellation of a scheme. There is an indication on the record that the aim would be to return money as a matter of course, although some flexibility may be necessary. I therefore beg to ask leave to withdraw the amendment.