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New Clause 1 — Project Delivery Board

Theft from Shops (Use of Penalty Notices for Disorder) – in the House of Commons at 12:58 pm on 11th March 2009.

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'(1) Where a levying authority imposes a BRS it shall set up a body corporate called the Project Delivery Board (in this Act referred to to as "the Board") to oversee delivery of the project to be funded by the BRS.

(2) Schedule [Project Delivery Board] is about the Board.'.— (Dan Rogerson.)

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Photo of Michael Martin Michael Martin Chair, Speaker's Committee on the Electoral Commission, Speaker of the House of Commons

With this it will be convenient to discuss the following: Amendment 1, page 13, line 6, leave out clause 19.

New schedule 1— 'Project Delivery Board—

1 A Board shall be established at the first instance of an initial prospectus being published for the imposition of an approved BRS.2 A Board shall exisit for the period in which the BRS is in existence.3 The members of the Board are to be appointed by the relevant levying authority in the following way—

(a) a third are to be representatives from the affected local authority;

(b) a third are to be representatives from the affected local business community;

(c) the remainder is to be made up of members appointed as thought appropriate by the relevant levying authority.

4 In appointing members to the Board the levying authority must have regard to the desirability of securing that the Board is able to perform its functions effectively and efficiently.5 Where two or more levying authorities are acting jointly by virtue of a BRS the Board shall be established by arrangement between those levying authorities.6 The Board's functions are to be specified by regulations.7 Regulations under paragraph 6 must be made by the Secretary of State within 90 days of the commencement of this Act.8 Regulations under paragraph 6 may authorise a levying authority to use a prescribed proportion of such sums as it collects or recovers in respect of a BRS to meet expenses incurred by the Board.9 Expenses incurred under paragraph 8 may not extend to a salary for any Board member.'.

Amendment 16, in schedule 1, page 22, line 16, at end insert—

'11A A description of the arrangements by which persons paying the BRS shall—

(a) be kept informed of what monies have been raised in pursuance of the BRS and how they have been expended, and

(b) be represented upon the governing body of any organisation set up for the purposes of delivering the objectives of the BRS, or, if such organisation is not to be set up, how such persons are to be involved in the oversight of the delivery of such objectives.'.

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Photo of Dan Rogerson Dan Rogerson Opposition Whip (Commons), Shadow Minister (Communities and Local Government)

As we heard in the previous debate, the Bill is attracting increasing attention from business people throughout the country whose business may be affected, should the local authority or a group of local authorities in their area choose to opt for the mechanism set out in the Bill in order to fund a local infrastructure project. Although I said on Second Reading that my party is not opposed to the principle of a business contribution to important infrastructure projects, we believe that safeguards are needed so that the businesses affected feel that they have an input, first, into the proposal being drawn up, and secondly, into whether the proposal meets with approval, as we shall discuss later.

Businesses and organisations that I have spoken to felt that the business improvement districts process was valuable because it enabled the continuing engagement of the business community in the delivery of a project, so that businesses can be reassured that the project is proceeding to schedule and in the way originally envisaged, and so that they can make a contribution to delivery through their experience in delivering similar projects in the private sector.

The new clause would set up a project delivery board as a mechanism for businesses that were making a contribution through business rate supplement, local authority representatives and others appointed to the board to enable them to come together to ensure that there was adequate oversight of the project as progressed. The positive relations that, hopefully, would have been fostered during the putting together of the prospectus would continue, increasing opportunities for joint working.

As we heard in Committee, many hon. Members consider it important to put on the record that relationships between local authorities and the business community are much better now than they have been in the past. I know that the Minister and his colleagues have used that point to argue that the ballot is not necessary in all circumstances.

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Photo of Mark Field Mark Field Conservative, Cities of London and Westminster

The hon. Gentleman and the Minister have both said that the relationship between businesses and local authorities is profound, particularly in the case of high- profile business regeneration in our inner cities, but does the hon. Gentleman not have some concerns that the third element, the residential population, especially in our bigger cities, has often been left out? How would he try to ensure that there was input from residential communities whose vibrancy is an important part of ensuring that such initiatives are maintained, particularly in our inner-city areas, where they are most likely to take place?

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Photo of Dan Rogerson Dan Rogerson Opposition Whip (Commons), Shadow Minister (Communities and Local Government)

The hon. Gentleman raises a good point. In his constituency there is an organisation that represents a small residential community which does not participate as strongly in elections to that body as does the business community represented in the Corporation of London, although I note from the press that that may change and that there are moves afoot for residents to mount more of a challenge at the next elections.

From my party's perspective, the important thing is that local authorities represent the residential community. They are elected by the residential community, so it is crucial that the local authority is well represented on the board. It is the levying authority or part of the group of levying authorities and will have consulted its electorate and been elected on a platform to deliver projects such as those that may be proposed. That is a safeguard, but schedule 1 also sets out that a third of the board could be appointed by the levying authority so, for example, if the project was specifically relevant to an area where there was an active residents association, I can see no reason why someone from that association could not be co-opted to the board to represent the voice of the residents, as the hon. Gentleman suggests.

As I was saying, it is necessary to reassure the business community that its voice matters not just in putting together the proposal and signing up to it, but in the ongoing delivery of it. The board would be an additional means of fostering positive relations between local authorities and the local business community. Those relationships are undoubtedly much stronger, but the fact that all hon. Members have been lobbied by business organisations about the Bill proves that there are still issues to be overcome.

One of the matters raised time and again by businesses is, sadly, concerns about the delivery of certain local projects. The new clause would help to reassure businesses that its voice would be heard and would be central to the delivery of the BID. If the business community had any concerns about business rate supplements being levied for purposes not entirely set out in the prospectus—I am sure the Minister will tell me that that is not possible and that there are safeguards in place to protect against that—it would be reassured by having its representatives at the heart of the process.

In the debate on the programme motion, we heard from the Minister that we had excellent evidence sessions. He is right. Hon. Members in all parts of the Committee agreed that one of the most important contributions was that of Dr. Julie Grail from British BIDs. In her evidence to us at our second sitting on Tuesday 20 January she said:

"With regard to the business rate supplement, we have heard a lot today about concern with the ballot...it is not just about the ballot... it is about managing the relationship going forward. One huge value that we have seen coming out of BIDs is that it has truly brought together local government and the business community. A danger about the business rates supplement is that it could rip it apart again." ——[ Official Report, Business Rate Supplements Public Bill Committee, 20 January 2009; c. 46, Q199.]

Of course, that is not the intention, but there clearly are concerns in the business community about that. We have a model in BIDs showing how positive relationships can be fostered and can deliver projects that respond to local need and ensure that everybody has a say in their ongoing management. If there was that model and it was successful for the local sorts of projects that bids deliver, we could adapt it to cover some of the bigger schemes that affect a wider area and which, it is hoped, the BRS could play a part in delivering.

According to the evidence from the head of the CBI's property group, if the business community were not consulted about a scheme, there would be considerable business unrest. The CBI stressed that it was imperative that businesses got the opportunity to work with local authorities to deliver real economic benefit to an area. A project delivery board would be exactly such an opportunity.

As I said, the new schedule sets out in a little more detail our initial thoughts about how the project delivery board might be formed and how it might operate. One concern that I am sure we all share is that we could create a body that does the same as other bodies, and duplicates—with all the waste of officers' and business people's valuable time and the costs that that would involve. We have therefore, for example, said that board members should not get any form of salary. That is the tone that we are trying to set: the board would be focused on delivery and would not necessarily have to meet regularly. It would, however, be a mechanism to ensure that everybody was involved in delivering what I hope would be exciting projects that would greatly improve areas, with benefits for residents and the business community.

Amendment 1 seeks to remove clause 19, which deals with when a levying authority has not given notice to a billing authority before the start of the financial year. The issue came up briefly in Committee. There is concern that billing authorities might have to respond very quickly. That could be an extra burden on them and cause problems for businesses and local authorities as they react. The amendment is to test the Minister's view on the issue. Surely things should be done in good time for the billing authority—in other words, by the start of the financial year so that the bills can go out together and there is no need for supplementary billing or recall of any bills. The business community would certainly welcome that. I am sure that the billing authorities, as distinct from the levying authorities, would also welcome it.

I am sure that Robert Neill will correct me if I am wrong about his amendment 16, which seeks to define and contain how money raised by the BRS is spent and to make sure that that happens according to the prospectus and that there is no prospect of its being used for other purposes. Furthermore, if a governing body were set up along the lines that I set out in new clause 1, the amendment says that the business community should be involved and sets out how that should happen. Amendment 16 is on lines similar to those of new clause 1, although I think that our new clause, which sets up a project delivery board, is a clearer and, I hope, more defined way of doing things.

New clause 1 would improve the Bill in respect of the crucial element of business involvement. There is support in the country for the concept of a business rate supplement delivering an important local project, as long as everybody is clear about what the money is being spent on and everybody is signed up and willing to participate and has a continuing voice in the delivery of the project. I look forward to what the Minister has to say on the new clause, but I should say that I am minded to press it to a vote, should the Minister not agree to it.

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Photo of Bob Neill Bob Neill Shadow Minister (Communities and Local Government), Deputy Chair, Conservative Party

I have much sympathy with many of the remarks of Dan Rogerson. We debated the issue in detail in Committee and it goes to the heart of how we make the Bill work. My hon. Friends and I make no bones about our position on the Bill in principle: we think it a mistake to use the Bill to impose burdens on businesses, with the exception of Crossrail, in the current climate. That said, if the numbers are against us, let us see what can be done to make the arrangement work better. That is why we are interested in the hon. Gentleman's proposal.

In Committee, I thought that the Government were not uninterested either; the Under-Secretary of State, Mr. Khan, replied in a constructive way, saying that he and his officials would consider the issue. The hon. Member for North Cornwall referred to the powerful evidence of Dr. Grail, whom Committee members from all parties regarded as one of the most impressive of a strong team of witnesses. I hope that the Department will find a way of taking the issue on board.

Furthermore, there is logic to the proposals, which go right the way back to the Lyons review, which was one of the drivers of the original proposal. It made a point about the importance of securing legitimacy and support from the business community. That works in two ways. The first, to which we shall come later, is the opportunity for businesses to have a genuine say by means of a ballot. The second, every bit as important, is the thought that even if there is a ballot—and I hope that there will be—things should not just stop there. Business has to have an ongoing involvement. There is a compelling logic to that; businesses have perhaps the largest stake in the success of a BRS scheme. They are ultimately the potential beneficiaries, but they are footing the bill at the same time. Furthermore, they are likely to have local and sectoral knowledge to bring to the discussion.

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Photo of Lee Scott Lee Scott Conservative, Ilford North

Does my hon. Friend agree that if something was going wrong with a project, the local businesses, because of their nature, would be the first to realise it? Involving local businesses could benefit the project.

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Photo of Bob Neill Bob Neill Shadow Minister (Communities and Local Government), Deputy Chair, Conservative Party

I absolutely agree with my hon. Friend, who makes a powerful point. I was a member of a local authority for 16 years and I worked well with excellent local authority officers. However, the fact is that the business man can bring an additional dimension that neither I as an elected member nor the officers were always in a position to bring. If the BRS or business improvement districts are to work on the basis of genuine collaboration between the local authority as a governing body and the business community, having that ongoing and structurally assured involvement is important.

Often the business person will spot something because of the nature of the culture that they are in; it might not be spotted by the elected officers who work in the administrative culture. That hugely powerful point should be taken on board. That is why we tabled amendment 16, which covers much the same ground as new clause 1, although there is an additional factor that I shall come to. Like the approach adopted by the hon. Member for North Cornwall, my approach will be influenced by what Ministers say they have been able to do to take the issue forward.

The point of difference between me and the hon. Gentleman is that his new clause might be a little too prescriptive in specifying the form of delivery vehicle that there must be. In some cases, the project delivery board might be the right vehicle; I can, however, think of some BRS schemes for which it might not be appropriate. That is why, both here and in Committee, I have deliberately cast my amendment in broader terms so that before a decision is made—and before the businesses vote, as I hope they would—the prospectus will set out how that ongoing involvement will take place. That will vary and should have the opportunity to do so, according to the nature of the scheme and the scale, place and sector involved. The point is that the information should be set out before the die is cast and the commitment to the BRS scheme is made. Sometimes, it may be done along the lines of the delivery board model, but not always, which is why I would like greater flexibility.

The other matter that I have added to the original amendment that I tabled in Committee relates to strengthening the requirements on the provision of financial information—an issue that became apparent during the evidence given to the Committee by several people. That provision would introduce an obligation to spell out clearly the moneys that are to be raised in pursuance of the BRS, and what they will be expended on.

There was some debate in Committee about the definition of the purposes that BRS could be used for. We debated whether it was appropriate to go down the route of defining by exception, which is more or less the scheme adopted in the Bill. It says that the BRS cannot be used for X, Y or Z—broadly, other types of local service—but is otherwise silent about its application. The view of the bulk of the business community is that we should specify the categories of project that the moneys can be used for. The amendment would attempt to offer a middle way, and if we believe in localism and a ballot on such matters, the prospectus should set out exactly how people will be told, before they decide, what money is being raised and what it will be expended upon.

An ongoing, iterative process would be involved so that, unlike the current arrangement, it would not just be a question of giving a broad-brush outline of what the project would be, and how much the overall budget would be, including certain other budget heads. I am talking about a more iterative process—almost a report back—to keep in touch with the community on what the money had been spent on so far, and what had been raised. It is like the requirement on the board of a company to produce annual accounts. There would be an obligation to provide regular updating, which is in everybody's interest, not least the proponents of the BRS scheme because it is desirable to have the confidence of the business community, and of council tax payers and residents.

I do not have a firm view on whether we will press these matters to a vote, but we hope for a positive response from the Minister, and our judgment will be largely coloured by that. I hope that he accepts that these are serious issues—I am sure that he and his colleagues do so—which have not been introduced in a partisan manner, but rather as a result of the evidence that we heard in Committee.

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Photo of Derek Twigg Derek Twigg Labour, Halton 1:30 pm, 11th March 2009

I shall make a few brief comments, particularly on new clause 1, because I want to save most of my remarks for the later group dealing with ballots. I pursued an argument in Committee about the changes in local government during the past 15 or 20 years, and the lack of trust. I am not sure whether Dan Rogerson trusts his Liberal Democrat-run councils, but I trust my Labour council to make the right decisions. It is a Labour council that has this year again had a four-star rating, and it has done remarkable work on regeneration and economic delivery in the borough of Halton and working more widely with Merseyside and Cheshire.

The new clause is over-prescriptive in telling local government what it should do. If I were to criticise what this Government have done over the past 12 years, I would say that we have sometimes been a bit over-prescriptive about local government. My right hon. Friend the Minister, dare I say it, took a different view in a number of areas about trusting local government and giving it some say in decisions. It is fine to legislate, and there must be safeguards; one of the safeguards in the Bill is that the Secretary of State can intervene if the procedures laid down in it are not being followed.

I feel that there is an in-built distrust of local government in this House, however, and a lack of willingness to give it more freedom to get on and deliver what many local authorities are already delivering through their tremendous economic development and regeneration policies. I believe that the new clause is over-prescriptive, and we should trust local government more. In these difficult economic times, I do not believe for one moment that local government will do something stupid such as putting businesses and jobs at risk in its own area. I do not think that that will happen.

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Photo of Dan Rogerson Dan Rogerson Opposition Whip (Commons), Shadow Minister (Communities and Local Government)

I was at great pains to say earlier that the relationship between business and local government has improved hugely over the past couple of decades, and that is absolutely right—I remember the hon. Gentleman making that point in Committee. However, we heard evidence in Committee from organisations such as British BIDs to say that the business improvement districts process, through continuing such engagement in a more formalised and recognised way, has been a positive step. The new clause seeks a similar mechanism for the BRS. Although there is a positive relationship in general, when we are talking specifically about an extra levy of cash on business for a specific project, business organisations, and BIDs, which represent everyone involved in those processes, feel that that is a positive model to use.

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Photo of Derek Twigg Derek Twigg Labour, Halton

I do not disagree with the hon. Gentleman's comments on what was said during the hearings; powerful representations were made. Lessons have been learned from that process, and the way in which local government has responded, working through partnership and co-operation for the benefit of a particular area, has borne that out. That shows that local government is in such a mindset, and we come down to a particular principle.

I shall finish on that point. In many areas, local government is responsible for leading regeneration and economic development. It has come a long way during the past 15 or 20 years and we should trust it more. The new clause and some of the comments made by Robert Neill go against that grain, and I fundamentally believe that we should give local government more freedom. We shall no doubt come later to differences as far as Crossrail is concerned—what we want to allow for it, and what we do in the rest of the country. I believe, however, that we must give local authorities more freedom to get on and work locally. Lots of organisations are working together already, and there are already forums for such decisions to be taken by working in partnership. To be prescriptive about the type of forum concerned is the wrong way to go about things.

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Photo of Bob Neill Bob Neill Shadow Minister (Communities and Local Government), Deputy Chair, Conservative Party

Given the hon. Gentleman's point about the forums and procedures that exist to allow bodies to work together, what is his objection, as far as amendment 16 is concerned, to saying that the prospectus should set out how such working together should take place? Amendment 16 is not trying to prescribe a particular model; it is just saying that the information should be set out.

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Photo of Derek Twigg Derek Twigg Labour, Halton

The hon. Gentleman makes my point for me. Why should we do that? In most areas—not every area—these forums already exist, or such co-operation is taking place, so I do not accept what he says. I genuinely believe that we would be telling local government how best to run its local area. I strongly feel that local government should be given the freedom to get on and deliver what is important, working with all the partners in the local area to deliver the sort of improvements that we all want.

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Photo of Mark Field Mark Field Conservative, Cities of London and Westminster

The Minister will be aware from previous debates on this matter that I have perhaps a little more sympathy than one or two of my colleagues for the whole principle of business rate supplements. This is not the ideal year for the Bill. Had it been introduced a few years ago, those in my party might not have had the many understandable concerns that we have expressed, representing business interests, given the real financial and economic problems that are facing our businesses.

I fully support my hon. Friend Robert Neill in speaking to amendment 16, so I must express some opposition to the comments made by Derek Twigg. I worry that the credibility of BRS schemes is crucial. There is a risk of such schemes, particularly the longer ones, seeming to be at quite a distance from the local authority. During what might be a 10 or 12-year scheme—a bigger type of regeneration project perhaps—a range of different councillors may be involved. A certain political party will be in office when a BRS scheme is put into place, and by the time it comes to fruition a different one might be in office. It is therefore all the more important that we have an ongoing input from business in the way that we have set out.

I agree with a number of the comments that have been made, although I have some sympathy with what Dan Rogerson proposed. The notion of having a project delivery board, in the way he sets out, would be over-prescriptive and highly unwieldy. It would detract from what we are trying to achieve. The hon. Gentleman will forgive me if I consider the proposal in the context of Crossrail. How on earth could we have a project delivery board that would avoid being anything more than an extra layer of bureaucracy that left us open to a lot of confusion, if it were given a project of such size that it took into account the views of people from 33 different boroughs?

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Photo of Dan Rogerson Dan Rogerson Opposition Whip (Commons), Shadow Minister (Communities and Local Government)

I am pleased that the hon. Gentleman is exploring the matter and supports us on the general concept, although I appreciate that he is unhappy with some of the details of the new clause. We have been at pains throughout the process to point out that there is a distinction between Crossrail and projects in the rest of the country. Indeed, his own party has sought to do that as well. Although I believe that a mechanism could be found to ensure that local government and the business community in London are represented, we need to consider closely how the system will operate in other areas. We are considering a specific case in London, but the Bill may well be applied across the whole country.

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Photo of Mark Field Mark Field Conservative, Cities of London and Westminster

I appreciate that the Bill will not necessarily create fully fledged Crossrails across the board.

The hon. Gentleman made a comparison between the proposed business rate supplements and business improvement districts. I believe that we will return to that matter in other debates this afternoon. It is crucial that we draw a firm distinction between the two. My biggest fear is that by putting the Bill on the statute book, we will allow it to be used for small infrastructure projects that should be covered not by a BRS but by BID-type schemes. A BID works by being highly localised and highly focused, and by working for businesses that, as in my constituency, are often within a couple of roads or a small number of blocks of each other. Those schemes work extremely well, and having some sort of delivery board mechanism makes sense in the context of a highly localised scheme.

My concern, which is implicit in all the amendments in this group, is that no local authority should be able to say, "Right, we've now got our BRS scheme through and we do not need to bother with worrying about the concerns of business or anybody else for the next 10 or 12 years", or however long the project takes. That would be wrong, which is why I support amendment 16. Equally, we should avoid highly prescriptive man-management that would only provide a further level of bureaucracy and confusion. I hope that the Government will give some thought here and in another place to finding a way to ensure that the credibility of BRS schemes is maintained. I know that we will come on to ballots later this afternoon, but my biggest concern is that without some safeguard for business, there is a real risk that credibility will be undermined and the system will simply be seen as another opportunity for a cash-grab from the Government, rather than used for a specific purpose that benefits a business community in infrastructure terms.

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Photo of John Redwood John Redwood Conservative, Wokingham

I see the need for something that will satisfy the business community that a project is worthy and well managed, but I share the concerns of those who believe that imposing a board in every case might be difficult, inappropriate or unnecessarily bureaucratic. Under the terms of new clause 1, it is difficult to know who from the private sector side would want to volunteer to sit on such a board. We learn from new schedule 1 that there would be no remuneration, and we can imagine that in some cases the meetings would be long and frequent.

Anyone considering sitting on such a board would want to know what their legal duties and responsibilities were and what the consequences might be if something went wrong. Would it be a board in the legal sense, on which a director sits only if he is aware that serious legal duties and requirements are placed on him, and aware of what provision is to be made for officer insurance, professional indemnity and all the other things that anyone placed in that position of trust deals with? If so, that would represent a labour due imposed on top of the cash charge that the business community will be invited to expend. It is bad enough that a company will have to pay the tax, but worse for it to be told that it must put up some people to sit on the supervising board so as not to make an even bigger mess of the scheme. That would mean that they were invited to give of their time free, on top of having to give their money to the project in question. I see certain difficulties in that.

I assume that in line 3 of proposed subsection (1) of new clause 1, we do not need the word "to" twice, and that that is a typing error or misdrafting that could be dealt with.

New schedule 1 provides what support there is for the idea of the board, but it is quite slim. We are told in paragraph 6 that the board's functions would be specified by regulations. If that idea were to go any further, those regulations would be of great interest to the House, as they are where the meat of the system would be. Currently, we know nothing about the intended responsibilities, duties or legal requirements, the degree of surveillance required or the necessary reporting, accountability and so on.

We learn from the new schedule that the members of the board are to be appointed in the following way. One third are to be representatives from the affected local authority; one can understand that. However, only one third are to be representatives of those paying—the affected local business community. The remainder—one's mental arithmetic might run so far as to say the other one third—are to be

"members appointed as thought appropriate by the relevant levying authority."

In other words, the authority seeking the money and imposing the tax on the local community could have two thirds of the board members. It could therefore win any simple majority vote and a lot of weighted majority votes up to the two-thirds threshold. That would give it effective control.

I am sure that the framers of the new schedule have it in mind that the local authority will be well disposed towards the local community and want people of independence and stature on the board. However, that is not what the new schedule actually says.

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Photo of Brian Binley Brian Binley Conservative, Northampton South 1:45 pm, 11th March 2009

The objective of allowing scrutiny is to allay suspicion and fear. The appointment of the whole board would be in the hands of local authorities, some of which are very unpopular. In my area we currently have a Liberal local authority that is immensely unpopular. Does my right hon. Friend agree that suspicion would not be allayed if such power were invested in the hands of such an authority?

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Photo of John Redwood John Redwood Conservative, Wokingham

Yes. I do not want to make this party political, although I have had experience of what my hon. Friend mentions, but a council of any kind could become unpopular. It might make itself unpopular by proposing one of the supplementary levies provided for in the Bill, no doubt on top of a large council tax increase at the capping threshold. Yet under the new schedule, local authorities would not just be given the power to have a third of the representatives and to choose the third who are perhaps intended to be more independent, although that is not stated. They would be given the power to choose the whole lot.

The business community might choose for the board two or three good people who, despite all the obvious aggravation and the lack of wisdom involved in sitting on one of these things, decided that they wanted to do so because there was a big project. The local authority would have every right to say, "No, we're not having them. We would rather have some friendly, helpful people who are of our political disposition or agree with us about this project", so that there would be no grit in the oyster and no challenge to how the project was going ahead. The new schedule reveals a weak system, which in certain circumstances would prevent the board from acting as an accountable body with control over costs and responsibility for better project management. If a local authority were determined to drive something through, against the interests of its electorate, it could do so. That is a great weakness in the system that is suggested.

We are told that a board would be established

"at the first instance of an initial prospectus being published for the imposition of an approved BRS", and that it would continue for the whole period for which the BRS existed. That means that it would be a long task in many cases, and that, too, would make it more difficult to get people of good quality on the board. We are told:

"In appointing members to the Board the levying authority must have regard to the desirability of securing that the Board is able to perform its functions effectively and efficiently."

That is a very wide suggestion, and I do not believe that it requires a local authority to have much discipline in choosing people of substance who are likely to provide the critical analysis and accountability that we would like. We are told that everything else will be sorted out in regulations—doubtless, they are still to be drafted.

I therefore have more sympathy with the more wide-ranging amendment 16, in which my hon. Friend Robert Neill leaves open the question whether we need such a body, and correctly directs attention to the lack of accountability in the projects if we do not provide for some sort of mechanism. We are here, even at such a late stage in the Bill's progress, to tell the Government that there is a genuine problem of accountability. The system is unsatisfactory anyway, in that it enables the imposition of big levies on local communities in times of stress. If there is no proper system for engaging them and getting them to believe that a project is well run and that the expenditure is properly controlled, that makes matters far worse. Amendment 16 gives scope for the Government to make regulations under the Bill that might get nearer the mark.

I therefore hope that the Government will use new clause 1 as a prod and a stimulus to improve their Bill. I do not believe that it is quite right, for the reasons that I identified and for others with which I shall not delay House. Perhaps amendment 16 provides a way forward if the Government are willing, and if they are prepared to produce regulations to give some accountability under the law.

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Photo of John Healey John Healey Minister of State (Department of Communities and Local Government) (Local Government)

We have now moved beyond the programme motion debate and back to the serious scrutiny that has been characteristic of the way in which all hon. Members who have been involved with the Bill have dealt with it. I shall try to respond in kind. I want to encourage the hon. Members for North Cornwall (Dan Rogerson) and for Bromley and Chislehurst (Robert Neill) to feel that they do not need to press either the new clause or the amendment that they respectively tabled.

Let me start by looking for common ground. I agree that it is important for businesses to feel confident about the running of any project to which the business rate supplement contributes a funding stream. It is also important that they are kept informed of a project's progress and of the costs that are incurred in running it. However, new clause 1 would over-centralise and is too prescriptive, as other hon. Members have pointed out. I intend to achieve the same end through much more flexible means.

I urge the hon. Member for North Cornwall to consider that, if the duty on levying authorities to set up a body to oversee the delivery of any project that was funded or part funded by a business rate supplement existed—even if that supplement were a small element of a much larger funding package, which would inevitably have its own governance arrangements—the authority would still need to establish a project delivery board such as he has described. Although I am with the hon. Gentleman in principle, a moment's pause suggests that, in practice, the new clause would be too prescriptive. It may not work in all circumstances, and Mr. Field rightly asked whether we could imagine it working for the arrangements that are properly in place for Crossrail. The new clause is likely to blur the lines of accountability and could lead to less rather than more effective management of the delivery of any project linked to the business rate supplement.

Mr. Redwood made an important point about the new clause. It specifies that the board should be a "body corporate", which has implications for those who would sit on a board. They may face the possibility of being legally liable and responsible for a project over which they have relatively little direct control. Ultimately, responsibility for such a project must rest with those who are put there to take it.

My preference is in keeping with the arguments that my hon. Friend Derek Twigg presented. The levying authorities, clearly with wide local consultation, are best placed to determine the appropriate governance for a project. It is neither easy nor appropriate to specify that centrally. It should certainly not be done in of the Bill.

Amendment 16 attempts to introduce a similar provision more flexibly. As the hon. Member for Bromley and Chislehurst said, the delivery board model may not always be appropriate. He wants to ensure that the business rate supplement prospectus makes it clear how those paying it can expect to be informed, especially about the amount of revenue that has been raised and how it is being spent. The Bill already provides for that. Paragraph 11 of schedule 1 requires levying authorities to make clear in their prospectus the way in which those liable for the supplement will be informed about the expenditure incurred on a BRS project. It also requires the authorities to set out how they will provide updates on the work until its completion. In other words, levying authorities will not be able to keep in the dark businesses that pay the business rate supplement.

Let me be clear and, by doing so, attempt to be helpful. We also expect levying authorities to consider how they will involve businesses in running any project that is funded or part funded by a business rate supplement. Indeed, in the draft statutory guidance that is out for consultation, we have made it clear that authorities should consider how they can involve businesses over and above the specific statutory consultation. Consultation on the draft statutory guidance closes on 17 April.

Amendment 16 is also too prescriptive. The message in the guidance is clear to authorities: it is important to ensure that those who pay the business rate supplement are informed and involved in running a BRS project. It also gives authorities the scope to determine what is appropriate given the nature of the project and the needs of the local community as well as the desire of local businesses to get involved.

As I said in Committee, consultation on the statutory guidance is under way and we have put down markers in it. I also made it clear to the Committee that we will consider the points that were made in the debate as part of the consultation.

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Photo of Bob Neill Bob Neill Shadow Minister (Communities and Local Government), Deputy Chair, Conservative Party

I am grateful for the spirit in which the Minister has approached the matter. I do not seek to be needlessly prescriptive and I am grateful for his comments on paragraph 11. I understand the intention behind his point about the statutory guidance, which is out for consultation, but what is the sanction if a levying authority does not come up with the goods under that guidance? We must give the business community some assurance that there is a fall-back and a sanction.

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Photo of John Healey John Healey Minister of State (Department of Communities and Local Government) (Local Government)

The hon. Gentleman has a good memory and I am surprised that he has overlooked our detailed discussion in Committee about the provisions that set out the range of sanctions. Ultimately, the Secretary of State has the power to suspend a business rate supplement. Before that point, there is range of other potential interventions and sanctions, which we discussed.

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Photo of Bob Neill Bob Neill Shadow Minister (Communities and Local Government), Deputy Chair, Conservative Party

The Minister is generous, as always, in giving way. His response may help us crystallise our thinking about what we do. Does he envisage a position whereby the draft statutory guidance, once it is issued—I do not know what his time frame is or how it will fit in with considerations in another place—will set out how the business community is to be involved before a decision is made? I do not want to be unduly prescriptive, but does he understand that moving in and using sanctions is to shut the stable door after the horse has bolted? We want an assurance that people will be informed before they make a decision about a BRS.

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Photo of John Healey John Healey Minister of State (Department of Communities and Local Government) (Local Government)

The guidance is statutory and authorities are therefore clearly expected to follow any terms set out in it, especially when it applies to the way in which they are expected to consider a case for a business rate supplement: consulting on the ideas and involving others, including potential BRS payers, in their preparation. We have published the proposed guidance in draft and we will update it after the consultation closes.

I have said that we will take into account the points made in this debate and in Committee in coming to our conclusions about the content of that guidance. I hope that the hon. Members for Bromley and Chislehurst and for North Cornwall will both regard that as a sensible and flexible but nevertheless clear and firm way of ensuring the aims that they seek.

The hon. Member for North Cornwall said that he was testing my view with amendment 1, which would mean that levying authorities in two-tier areas would be able to levy a business rate supplement or vary one only from the beginning of any billing round in April each year. It will certainly be more efficient for billing authorities to collect the supplement at the same time as they collect business rates. That is why we want to encourage, as we are doing, any authorities to collect the supplement in order to do just that.

As the impact assessment that accompanies the Bill says, and as I explained in Committee, when the business rate supplement is collected as part of the annual billing round, the Bill provides for the costs of that collection to be met from the revenues of the business rate supplement. When the business rate supplement is collected as a separate exercise, the costs of collection would have to be met by the levying authority. There is therefore a clear financial disincentive to do anything other than make the collection part of the annual billing round.

The hon. Gentleman's proposal is unnecessarily restrictive—he is nodding, which I hope means that he would accept the general argument and not press amendment 1 to a vote. The risk is that if there were a minor delay—say, a month—in a project for any reason, including any reason not connected with the BRS, amendment 1 would require a whole year's delay before that project with the BRS element could get up and running. That is unduly inflexible and gives undue weight to administrative processes rather than to the proper delivery of the projects concerned.

In summary, hon. Members have ably made their arguments this afternoon. I hope that they will allow us to consider those arguments as part of the current consultation on the statutory guidance. We are concerned about the credibility of any BRS-supported project, as the hon. Member for Cities of London and Westminster urged that we should be, as well as about the delivery of those projects. The guidance is clear and so is our aim through that guidance. Our approach is more flexible than that proposed either by new clause 1 or amendment 16. It allows for arrangements that will properly inform and involve the business community, and BRS payers in particular. Our approach will also mean that any proper arrangements can suit the area, the project and the BRS scheme concerned. I hope that the hon. Members for North Cornwall and for Bromley and Chislehurst will not need to press their amendments to a Division.

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Photo of Dan Rogerson Dan Rogerson Opposition Whip (Commons), Shadow Minister (Communities and Local Government) 2:00 pm, 11th March 2009

I am pleased to have prompted a debate about the issue, if nothing else, although I sense that there may be a range of views not entirely sympathetic to new clause 1.

I am also grateful to hear the Minister's determination to ensure that wherever such a project goes forward, the business community will have a role in its ongoing delivery and in the oversight of it. As Robert Neill said, the intention behind amendment 16 is to ensure that that is the case. However, I have noticed a tendency in other Bills for things to be left to be clarified later. Although I sadly do not have the resources at my disposal that the Minister does to test every thought that I have and to ensure that everything is drafted as it should be, I wanted new clause 1 to make the Bill more prescriptive and say that there must be a body that formalises the business involvement in an ongoing relationship.

I was also seeking to look at how the BIDs model works. Mr. Field is absolutely right that BIDs and the BRS will do different things in different places. However, as models for delivery, they provide us with a starting point. I am seeking to press for such a vehicle with new clause 1. Mr. Redwood was keen to pick holes in new clause 1 and to look for areas of disagreement. However, I welcome the fact that he and all other Conservatives Members who have spoken are keen that there should be a safeguard for businesses, so that they can be confident that they have a role to play.

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Photo of John Redwood John Redwood Conservative, Wokingham

I was not trying to pick holes in new clause 1; I was trying to say that we need a structure that will work. That is what we are groping towards, but it is a pity that the Minister did not tell us whether the schemes would normally be local authority-run schemes or private finance initiative or public-private partnership-type schemes. However, we have to build on whatever command structure is in place and have accountability and representation.

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Photo of Dan Rogerson Dan Rogerson Opposition Whip (Commons), Shadow Minister (Communities and Local Government)

I am grateful to the right hon. Gentleman for that clarification. However, I am concerned that amendment 16 may not be quite as reassuring to the business community, in that it still puts the onus on the local authority to come up with the means.

The right hon. Gentleman talked about the proportion of business people on the body proposed by new clause 1 being only a third. However, the project delivery board would look at the oversight of the whole project. The BRS is part of the finance package, so it would be unfair for the business community to form all or half of that body if its funding was less than that.

Were new clause 1 to be added to the Bill, it might require some clarification, perhaps through discussions in another place. I am seeking to get something in the Bill that sets out clearly that the business community will have a role in the ongoing discussions on how a project is delivered. We are talking about a long-term commitment, and the right hon. Gentleman said that it was unfair to expect the business community to take on that commitment. I have spoken to business organisations—for example, when looking at BIDs and other systems—and it is clear that they can usually find a way through their representative bodies to ensure that the business community's voice is heard.

Although I am pleased to hear that the Minister is looking at the issues closely and saying to local authorities in the guidance, "You need to show us how you're going to involve the business community," I am concerned that the nuclear option of the Secretary of State stepping in and saying, "You cannot proceed," will not be used in many circumstances. Given that that sanction will be used only in rare circumstances, there is nothing that gives me huge confidence that there will be a systematic way for the business voice to be heard in the ongoing management of a project.

I am grateful to hear what the Minister said about amendment 1. I accept that there may be a need in some circumstances to move beyond that flexibility, but he has put on record his determination that the standard practice should be for everything to be in place at the beginning of the financial year, so that everybody knows what is coming and can plan accordingly.

To sum up my response to this debate, perhaps my new clause 1 is not perfect, but the Bill, too, is imperfect. By seeking to divide the House on my new clause, I hope that we can improve the Bill slightly and leave it to colleagues in another place to tighten up the detail.

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Question put, That the clause be read a Second time.

The House divided: Ayes 56, Noes 261.

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Division number 62 Theft from Shops (Use of Penalty Notices for Disorder) — New Clause 1 — Project Delivery Board

Aye: 56 MPs

No: 261 MPs

Ayes: A-Z by last name

Tellers

Nos: A-Z by last name

Tellers

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Question accordingly negatived.

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