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Clause 2 — Levying authorities

Theft from Shops (Use of Penalty Notices for Disorder) – in the House of Commons at 3:15 pm on 11th March 2009.

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Photo of Bob Neill Bob Neill Shadow Minister (Communities and Local Government), Deputy Chair, Conservative Party 3:15 pm, 11th March 2009

I beg to move amendment 5, page 1, line 17, leave out paragraphs (b) to (d).

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Photo of Michael Lord Michael Lord Deputy Speaker (Second Deputy Chairman of Ways and Means)

With this it will be convenient to discuss the following: Amendment 3, page 1, line 20, after 'Wales', insert ', and

(e) the National Assembly for Wales.'.

Amendment 6, page 2, line 1, leave out subsections (2) and (3).

Amendment 7, in clause 3, page 2, line 44, leave out paragraph (b).

Amendment 8, in clause 5, page 3, line 29, leave out subsection (2).

Amendment 9, in clause 5, page 3, line 36 [Clause 5], leave out subsection (4).

Amendment 10, in clause 28, page 17, line 42, leave out subsection (3).

Amendment 11, in clause 29, page 18, line 21, leave out paragraph (b).

Amendment 12, in clause 29, page 18, line 44, leave out paragraph (b).

Amendment 13, in clause 30, page 19, line 6, leave out paragraph (b).

Amendment 14, in schedule 2, page 23, line 26, leave out subparagraph (3).

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

We return now to the issue that has been fairly central to some of the earlier discussion of the Bill—its extent. My amendment replicates one that gave rise to a major debate in Committee. We contend that in the current circumstances the introduction of a nationwide power to levy what is calculated, on any view, to be the better part of a £600 million potential tax burden on businesses is inappropriate and likely to be damaging to the overall interests of the economy. This is not to do with the overall intellectual arguments for or against business rate supplements; the fact is that often in politics practical timing is a key consideration. For reasons that were well rehearsed on Second Reading and in Committee, we believe that there is a real risk that local authorities will feel pressured to resort to this as a means of raising funding right across the board.

An exception to that relates to the Crossrail project in London. The amendment would limit the scope of the Bill to London—to the Greater London Authority, the top-tier authority, which it is proposed, together with its functional bodies, will carry out the Crossrail project. The amendment would limit the scope to Crossrail because the Mayor of London, who was prayed in aid in the debate on an earlier group of amendments, has made it clear that although he wishes to be given the power to levy a supplementary business rate in relation to Crossrail, he does not intend to use it other than for Crossrail, purely on the basis of saying, "Let's get Crossrail going."

As a London Member of Parliament, I agree with Mr. Raynsford about the importance of Crossrail to the London economy; I am conscious that it will have real and considerable benefits, and I am anxious to ensure that we do not impede its progress. However, there are differences between the Crossrail project and a nationwide roll-out of the scheme.

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Photo of Phyllis Starkey Phyllis Starkey Labour, Milton Keynes South West 3:30 pm, 11th March 2009

I would be grateful if the hon. Gentleman could clarify whether his argument rests on a view that any project in London is bound to be more important than a project elsewhere; whether he trusts the Greater London Authority more than local authorities elsewhere; or whether he is merely arguing in this way because the Mayor of London happens to be a Conservative and it would be a bit embarrassing if Conservative Front Benchers went against his express wishes.

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

The answer is, in fact, none of those things, as the hon. Lady might have discerned. Crossrail is a project where the funding package was agreed before the delivery of this Bill. There is a political consensus on Crossrail in London because the funding package, including the proposal to levy a supplementary business rate to fund an element of it, was announced back in October 2007 in advance of the last London mayoral elections. It was well debated and well aired in London, where there was a clear consensus of view that it was a desirable way ahead. All the principal candidates in London had stood on the platform of supporting Crossrail and the funding package—certainly the candidates from all three major parties, and I think the Greens as well.

First, then, the proposal was well established. Secondly—let us be practical about these things—the deal was done, and unpicking the funding package would put the project at risk, and I do not intend to do anything that would put it at risk. That is a world away from taking a specific done deal, as the Government have done through this Bill instead of enacting a simple Crossrail enabling or financing Bill to deal with that one project and using that as an opportunity to roll out a nationwide project by stealth. That raises the prospect of significant increases in the tax burden on authorities that have nothing to do with Crossrail and are in different circumstances, and where some of the other tests that should apply to ensure that there is sign-up do not as yet apply.

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Photo of Nick Raynsford Nick Raynsford Labour, Greenwich and Woolwich

The hon. Gentleman will be aware, because he has referred to this already, that the genesis of the business rate supplement was in the Lyons review. When Sir Michael Lyons considered this, he was well aware of Crossrail. He did not recommend that this should be a specific funding mechanism solely for Crossrail, he recommended but that a business rate supplement should be available throughout the country. Why is the hon. Gentleman departing from Sir Michael Lyons's recommendation?

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

Because in the current circumstances it would be wrong to do so. I will adopt, if the right hon. Gentleman likes, a classically Keynesian argument—when the facts change, I change my opinion; that was the view of John Maynard Keynes. My right hon. Friend Mr. Redwood set out the facts very eloquently. It is not realistic, in the current economic climate, to place further tax burdens on businesses save in the most exceptional circumstances. I am prepared to regard Crossrail as an exceptional circumstance because of its national impact and the fact that there has been very significant debate beforehand. That does not apply elsewhere. For the reasons that have been well set out by my right hon. and hon. Friends, the inevitable cost pressures placed on local authorities in the current climate mean that this will be used as an additional form of revenue-raising regardless of the economic needs, and nobody desires that. That is why virtually all the business organisations have real concerns at the roll-out of a nationwide project as opposed to Crossrail.

The simple fact is that the world has moved on since it was thought that one could move fairly readily into the type of scheme that we are talking about. Under certain, different circumstances, and if carefully rehearsed, the scheme might be deliverable, but at the moment, if we embarked on a broad roll-out, it would, in our judgment, send exactly the wrong signals for business confidence. In the case of Crossrail, the issues are well rehearsed, and have been dealt with well.

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

I can see precisely what my hon. Friend is trying to achieve, and he is absolutely right about the cross-party commitment to Crossrail. Notwithstanding the fact that he has had reassurances from the Mayor of London that the power would not be used for any project other than Crossrail, is there not some concern on our side that central Government may decide, on the basis that London is included in the Bill and everywhere else is not, that no big infrastructure projects whatever will be funded by central Government? Might there not be an expectation that the funding would have to come from those powers? Perhaps, therefore, we ought to be even more specific about the fact that the powers relate to one specific project, rather than to one geographical area.

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

That point may be taken up elsewhere. My hon. Friend highlights an issue that underlines the fact that right, across the piece and in a number of areas, there has been a shifting of burdens from central Government to local government in one form or another. There may sometimes be arguments for that, but let us be honest about it. What we are really seeing is the potential for economic development moneys to be moved away from the central Exchequer to local residents and businesses.

The validity of my hon. Friend's point is reinforced by an interesting juxtaposition, which is perhaps wholly coincidental, although I do not think so. The Bill proposes giving local authorities right across the country the power to raise revenue from business for economic development purposes, and at the same time there has been a massive cut to the funding made available by central Government for the local authority business growth incentive scheme, which has been absolutely emasculated. It is interesting that the Treasury took away that money. The inevitable unwritten message was: "Sorry, local authorities; if you want those schemes to go ahead, you'll have to raise the money from your businesses, rather than getting it from us." That is ultimately a stealth tax, yet again.

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Photo of Lee Scott Lee Scott Conservative, Ilford North

Does my hon. Friend remember that in 2004, the then Mayor of London, Mr. Livingstone, addressed a meeting in the City, at which he clearly said, way before any Business Rate Supplements Bill had even been thought of, that a supplement would need to be put on business rates for Crossrail, should it be approved—it had not, at that time, been approved—and that it would be for Crossrail, and nothing else? Does my hon. Friend not agree that that only goes to show that the issue had nothing to do with party politics? The view was taken across the board.

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

My hon. Friend is right. There were moments when the previous Mayor of London had flashes of insight with which I agreed. He genuinely attempted to hold his hand out to the business community. He was right to say that Crossrail was a one-off; it is a one-off, because of its scale and complexity, the sums that have to be raised, and its implications. I do not have any problem with saying that it should be treated in that way.

I know that Labour Members will say—I can see them working up to it already—that the measure somehow deprives other parts of the country of an opportunity. I have to say that if I were running a small or medium-sized business in another part of the country, I would not, in the current circumstances, welcome the opportunity to have more taxation placed on me through the imposition of a levy. Now, when businesses are going broke, is not the time to do that.

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Photo of Phyllis Starkey Phyllis Starkey Labour, Milton Keynes South West

I am seriously disturbed by the thread, which has run through almost every contribution from Conservative Members, of disdain for local government and local democracy. The Bill is not imposing burdens; it is giving local authorities a power that they can use if they deem it necessary. I wonder how the hon. Gentleman reconciles his disdain for local government and the way in which it might use the power in the Bill with his party's avowed commitment to greater localism. There is a total contradiction between the two positions.

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

After 24 years' service in one form of local authority or another, I will not take any lectures from the hon. Lady about commitment to local government. We have been demonstrating that and putting our money and our mouths where our principles are, right along the line. I will not take any mealy-mouthed comments from her on that subject.

We believe in genuine empowerment. The hon. Lady ought to abolish the cap, for example, if she wants to give localism to local government. She could abolish the comprehensive area assessment, comprehensive performance assessment regime if she wants to give localism to local government. We will not take any lectures on localism from any Members on the Government Benches.

The measure has a ratchet effect. It gives a power to impose tax, but that is coupled with a reduction in central Government funding. It is a nudge, nudge, wink, wink suggestion whereby Government are saying to local government, "We can't provide funding any more because, thanks to the current Prime Minister, the national coffers are empty. You instead impose the cost of these desirable projects on to your businesses and your residents." That is what it is about, and that is why Labour Members protest so much—they know that they have been found out.

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Photo of Brian Binley Brian Binley Conservative, Northampton South

Does my hon. Friend agree that the Government clearly trust local government so much that they had to put a cap on the local rates applied in every district? They do not trust local government. That is the problem, and that is the point that my hon. Friend is making.

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

My hon. Friend is right, as ever. I note his long service in local government and the practical job that he did as portfolio-holder for finance in his county council, when he attempted to deliver value for money for people in Northamptonshire. We do not just trust local government; we have been practitioners of local government for much of our careers, so we speak with practical authority.

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Photo of Nick Raynsford Nick Raynsford Labour, Greenwich and Woolwich

I am grateful to the hon. Gentleman for giving way. May I take him back to the last debate on my proposed new clause 2, in which he expressed a certain level of support but argued that there had to be safeguards and, as I recall it, argued for a cap on the use of that power? Will he now reconcile that with what he has just said?

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

Very easily. I did not use the word "cap". I said that what was required was a guarantee that the offset would be translated in practice. That is a very different concept, as the right hon. Gentleman knows.

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

It was a good try by the right hon. Gentleman, as well, but it did not quite come off. The simple fact is that those are two different concepts.

The Government have chosen to use a settled agreement in relation to one part of the country to impose burdens which, in the current financial climate—that point must be emphasised—have the potential to do real damage, rather than doing good. The Government did not necessarily mean that to happen, but it is a consequence of the financial mess that the Government are in nationally that they seek to transfer those burdens, and it would be a classic example of the law of unintended consequences that arises with so much legislation.

We want Crossrail to proceed. The best means to do that would have been to separate that off so that we could have had a separate debate on a more timely and relaxed basis about the appropriateness of rolling out BRS as a concept elsewhere in the country. That would have given us more time to consider the serious issues that the right hon. Gentleman raised, to which I hope we will still return. Nothing that has happened since has changed my view. That approach would have enabled Crossrail to proceed on a discrete and timely basis. I hope that we will take the amendment forward.

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Photo of Derek Twigg Derek Twigg Labour, Halton 3:45 pm, 11th March 2009

I hugely enjoyed the speech made by Robert Neill as he tried to dance around the reason for his party's line on this issue. The Conservatives are finding it difficult to keep a straight face. As we all know, this is about the fact that Boris Johnson is the Tory Mayor of London, that London is of vast importance to the Tories—it is also vastly important to us, of course—and that they do not want to risk a ballot in case it went wrong for them. I do not think that it would, but they do not want to take the risk, because they could be seen as the people who scuppered Crossrail, which I accept is of immense importance to London and to the nation as a whole.

As the Minister who introduced Crossrail to the House, I was convinced of the argument for it. Obviously, it involves a significant amount of money. We would like more of that money up in the north, but I accept the reason for it. Like the hon. Gentleman, I am proud of my time as a councillor: I spent 16 years as one on my local authority. I appreciate that time and how it has influenced what I have done in Parliament. However, there is a clear bias here: it is okay for London, but not for the north. The argument seems to be that no scheme elsewhere in the country—I speak particularly from the point of view of the north-west—could qualify for such an exemption because it would not be on the scale of Crossrail. I find that argument bizarre.

The other argument is that things are too far down the road for them to change, that all the work has been done before and that there should therefore not be a ballot. That cuts no ice with me. I do not understand the argument, because it clearly does not stack up. I come back to the point that the issue is that there is a Tory Mayor and that the scheme is so crucial that the Conservatives do not want any risk to it. They are therefore prepared to forgo the principle for which they have been arguing in Committee.

Three hours having elapsed since the commencement of proceedings on the programme motion, the debate was interrupted (Programme Order, this day).

The Deputy Speaker put forthwith the Question already proposed from the Chair (Standing Order No. 83E), That the amendment be made.

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The Committee divided: Ayes 151, Noes 337.

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Division number 63 Theft from Shops (Use of Penalty Notices for Disorder) — Clause 2 — Levying authorities

Aye: 150 MPs

No: 337 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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Photo of Michael Lord Michael Lord Deputy Speaker (Second Deputy Chairman of Ways and Means)

There cannot be a Division on amendment 15 because it is in a different group and has not been moved.

Mr. Deputy Speaker then put forthwith the Question necessary for the disposal of the business to be concluded at that time (Starting Order No. 83E).

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