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Clause 1 — Power to impose a BRS

Oral Answers to Questions — Prime Minister – in the House of Commons at 2:34 pm on 17th June 2009.

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Photo of Sarah McCarthy-Fry Sarah McCarthy-Fry Parliamentary Under-Secretary, Department for Communities and Local Government 2:34 pm, 17th June 2009

I beg to move, That this House
disagrees with Lords amendment 1.

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Photo of Alan Haselhurst Alan Haselhurst Deputy Speaker and Chairman of Ways and Means

With this it will be convenient to discuss the following: Lords amendment 2 and Government motion to disagree.

Lords amendment 3 and Government motion to disagree.

Lords amendment 4 and Government motion to disagree.

Lords amendment 5 and Government motion to disagree.

Lords amendment 6 and Government motion to disagree.

Lords amendment 13 and Government motion to disagree.

Lords amendment 14 and Government motion to disagree, and Government amendment (a) in lieu.

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Photo of Sarah McCarthy-Fry Sarah McCarthy-Fry Parliamentary Under-Secretary, Department for Communities and Local Government

The Bill was amended in the other place on Report, so a ballot is required before any business rate supplement can be levied or any existing business rate supplement can be varied. Due to amendments 8 and 9, which we will come on to, a ballot will not be required for the BRS that will form part of the Crossrail funding package.

The Government recognise that the BRS will not work unless there is a strong and effective partnership between the levying authority and local businesses. Throughout the passage of the Bill, we have made it clear that we expect levying authorities to engage with local businesses in the development of the BRS and to continue engaging with business once the project is under way.

To provide further reassurance on this point, we committed on Report to the statutory guidance making it clear that levying authorities must consider how they will engage with businesses over and above the statutory consultation. The appropriate approach to engagement, however, will depend on the nature of the project that BRS will be funding and the partnership arrangements that already exist between levying authorities and their local businesses. For that reason, we should leave levying authorities to work responsibly with their local businesses in developing BRS projects, rather than prescribing from Westminster how this should be done.

We should trust our local authorities. During the Public Bill Committee evidence sessions, Councillor Knight, speaking on behalf of the Local Government Association, said:

"The guarantee to local businesses that this power will not be abused is the guarantee that we are accountable to local communities. We have a direct interest in ensuring that local economies are maintained and sustained...No authority will make a decision that has a detrimental effect on its local business community." ——[ Official Report, Business Rate Supplements Public Bill Committee, 20 January 2009; c. 65-75. Q250]

The Government's position is that a ballot should be held in those cases where the supplement will fund more than one third of the estimated total cost of a project and it ensures that where businesses will be contributing a relatively large proportion of that project, they will have the power to vote on whether they make that contribution. If business votes against, the BRS will not happen. However, when businesses will contribute a smaller, although important, element towards the costs of a project, a judgment should be made locally on whether a ballot is appropriate. That is proportionate and reasonable, given that BRS revenues will contribute the lion's share of a project's funding in some cases, but a relatively small proportion in others.

Requiring a ballot, even in cases in which the supplement is funding a relatively small proportion of a project, potentially places undue emphasis on one aspect of a project. For example, a levying authority might propose to fund 10 per cent. of a project through a BRS. If the authority engaged with businesses at an early stage about the proposed project and business rate supplement and secured their support, and if that was then borne out through consultation, it would make no logical sense to require the authority to go through the process of holding a ballot.

It should be made clear that a ballot will not be a quick or cheap process. There should be no need for a ballot on a short-term business rate supplement that will fund a relatively small proportion of a project supported by business. The expense would be disproportionate, and in some cases simply could not be justified. That could result in a totally artificial discouragement to levying authorities to use BRSs in cases in which doing so would make a real and positive difference to an area.

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

I am interested in what the Minister is saying, but I am trying to reconcile the logic of her argument with that adopted by the former Minister for Local Government, John Healey on Second Reading and in Committee. Later we shall deal with BRS-BIDs—I note that Mr. Raynsford is present—and I am happy with the Lords amendments in question, but the earlier argument was that business improvement districts were by and large short-term projects, and that the BRS frequently related to longer-term projects. It is difficult to reconcile that argument with the Minister's current argument.

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Photo of Sarah McCarthy-Fry Sarah McCarthy-Fry Parliamentary Under-Secretary, Department for Communities and Local Government

I am merely giving a possible example. In the broad sense, obviously we expect the BRS to be much wider and to cover a much longer period. We are not necessarily talking about relative BIDs specific to a five-year period. We could be talking about a period of between five and 30 years.

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Photo of Nick Raynsford Nick Raynsford Labour, Greenwich and Woolwich

Robert Neill may have slightly misrepresented the position taken by the then Minister, my right hon. Friend John Healey, who strongly advocated the policy that is implicit in the Bill as presented to and agreed by the House of Commons that there should be a ballot as long as expenditure is over 30 per cent., but that there should not be an automatic ballot in other circumstances which could, as my hon. Friend the Minister has rightly said, involve unnecessary expenditure for relatively limited benefit. The distinction between BIDs and the BRS is that the BRS is for much larger capital investment, and BIDs involve far more local schemes, which may well go on for a long time. They are not necessarily limited to five years, as the hon. Member for Bromley and Chislehurst suggested. They could last for 20 years as long as there was support for them.

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Photo of Sarah McCarthy-Fry Sarah McCarthy-Fry Parliamentary Under-Secretary, Department for Communities and Local Government

As ever, my right hon. Friend's considerable knowledge of local government shines through.

As Lord Davies made clear, even if there is no ballot, levying authorities will not have a free rein to use the BRS to fund their pet projects regardless of the views of local businesses. They will be required to consult businesses formally, and that consultation will be over and above any preparatory dialogue in which they engage.

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

I am grateful to the Minister for being so generous in giving way. What reassurance can she give business that such consultation will be any different from many other recent consultations, such as the one on post office closures? Is not the problem that, sadly, consultation has become a somewhat devalued concept and that people seek a greater safeguard? Would not a ballot constitute such a safeguard?

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Photo of Sarah McCarthy-Fry Sarah McCarthy-Fry Parliamentary Under-Secretary, Department for Communities and Local Government

The hon. Gentleman can take comfort from the evidence given by organisations such as the Local Government Association. I think that the point was made then—it was certainly made in Committee by my right hon. Friend the Member for Wentworth—that we have moved on from the old-fashioned view that local authorities just wanted to get money out of businesses and were not prepared to consult them. I hope that the hon. Gentleman is confident, on the basis of the local authorities known to him, that authorities nowadays work in partnership with business and are committed to consultation of that kind.

Businesses have a guarantee that the BRS can be used only on additional projects that are aimed at promoting the economic development of the area. As such, BRSs are limited for use on additional projects that will be relevant to local businesses. Businesses also have a guarantee on the maximum level of the supplement with the national upper limit of 2p per pound of rateable value, and a guarantee that properties with a rateable value below £50,000 will be exempt from paying the supplement. It was right for us to include those safeguards. However, if a ballot is required in all cases, there will be a danger that financial institutions and funding partners will not be willing to commit funding when one element of the funding package is uncertain owing to the need for a ballot. That risks destabilising such funding packages, and makes the BRS a less attractive option for projects funded from multiple sources.

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Photo of Bob Neill Bob Neill Shadow Minister (Communities and Local Government), Deputy Chair, Conservative Party 2:45 pm, 17th June 2009

The Minister is being very generous. I hope that I shall not need to intervene again.

In the context of certainty, has the Minister seen a copy of the letter from the director general of the Confederation of British Industry dated 12 June and sent to her right hon. Friend the Secretary of State? The letter states that only mandatory ballots can give businesses the certainty that they desire. When will the Secretary of State respond to that letter?

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Photo of Sarah McCarthy-Fry Sarah McCarthy-Fry Parliamentary Under-Secretary, Department for Communities and Local Government

I will ascertain from my right hon. Friend's office when a response will be forthcoming, but I am sure that today's debate will constitute an element of that response.

We do not want to limit the BRS as really only an attractive option for use as the sole funding mechanism for a project. That limits levying authorities in terms of the amount of revenue they can raise, and means that the BRS cannot be used in conjunction with other funding streams to fund larger, more ambitious projects aimed at promoting local economies.

The effect will be particularly pronounced outside London. Properties in the London typically have higher rateable values than those outside the capital. Under the current proposals, properties in England with a rateable value of £50,000 will be exempt from paying the BRS. That threshold will exclude a higher proportion of properties from paying the supplement outside London than in the capital, which means that outside London there is an increased likelihood that the BRS will form part of a wider funding package. Therefore, the difficulty created by the ballot in cases in which the supplement will form part of a wider funding package will be more pronounced outside the capital. That makes the BRS less attractive as a funding mechanism to promote economic development outside London.

In requiring a ballot in certain circumstances, the White Paper and the Bill go significantly further than either the Lyons review or the Communities and Local Government Committee. Both recommended that the decision to hold a ballot should be left to the levying authority.

For the reasons that I have just given, we do not think that a ballot should be required in all cases. We consider that it should be required only in cases in which the supplement will fund more than one third of the total projected costs. However, because Members in both Houses have expressed real concern that there should be genuine engagement of local businesses before a supplement is introduced, we propose that in cases in which a ballot is not required by virtue of the fact that the supplement is expected to fund less than one third of the total cost of the project, the authority should be required to set out the BRS prospectus whether or not it intends to hold a ballot, and—importantly—to explain why it proposes that course of action.

I want to make it absolutely clear that the Government do not consider that a ballot should always be held. The amendment requires authorities to state why they think a ballot should, or should not, be held. It does not ask them to justify their decision only if they decide not to hold a ballot; there is not, as such, a presumption of a ballot. For instance, the BRS might be used to fund a small proportion of a project over a short period such as six to 12 months. In such cases, the costs of running a ballot might be considered to be disproportionate, given the contribution that would be made by the supplement. If an authority wanted to hold a ballot in such cases, taxpayers, including local businesses, would justifiably be interested in its reasoning.

The amendment provides important transparency in the decision-making process relating to ballots. We think it right for levying authorities to have discretion on whether to hold a ballot when the supplement is expected to fund less than one third of the total cost of the project. However, we acknowledge that the decision-making process must be transparent to those who will ultimately be liable for the supplement. The amendment will give businesses confidence that the decision-making process on ballots will be made clear. It allows levying authorities flexibility to do the right thing by their communities while ensuring that local businesses understand why the authority has taken a particular course of action.

For those reasons, I invite this House to disagree with the Lords amendments, and commend the Government's amendment in lieu to the House.

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

This is the first time that I have had the pleasure of doing business on local government issues with the Minister. As a member of a shadow team that has been in place a little longer than the Government team, I welcome her to her new post, and look forward to doing further business in the future.

I am sorry that we will have to start on a note of disagreement, but such is life. The Minister has set out much the same arguments in resisting the Lords amendments as Government spokesmen used in the other place. Their lordships were not convinced, and with every respect to the Minister's persuasive skills, I have to say that I am not either.

The key issue is that if the BRS is to be successful, it has to have wholehearted buy-in from, and the consent of, the business community, otherwise it will not achieve the stated objectives. It is well known—I repeat this point merely for the record, without elaborating on it—that the official Opposition would not have introduced a BRS at this time in an economic cycle, in the midst of a recession; the only exception in our case was the Crossrail project. That point has been well rehearsed and well debated, but I mention it to set the context. At a time when businesses are under more pressure than ever, the introduction of BRS—and without a ballot—would in our judgment be an unjustified and unduly onerous imposition on them. Businesses are already struggling; they are finding cash flow ever more difficult, and the costs of borrowing money to meet cash flow and other requirements are ever higher.

It is also important to remember that their lordships rightly debated this change not in isolation, but in the context of BRS together with other potential burdens on businesses. If we add in the cumulative burdens of a revaluation of the standard, ordinary business rate, never mind the BRS, and the possibility of extra parking charges and other levies, we see that there is a danger of the straw breaking the camel's back. That is why it seems to us that if there are to be BRS projects, it is only right and fair that businesses should have a chance to vote on that; otherwise, they will be caught in the invidious position of having a form of taxation without representation.

We will in due course move on to discuss amendments in relation to what are called joint BRS-BID levies. The only reason why I mention that at this stage is to own up to being a convert to BIDs. I was sceptical about them when they were first introduced, but I am now persuaded that they can be very successful. There is a key difference, however, in that for BIDs there is always a ballot of the businesses that are going to participate. That is an important lock in terms of both accountability and improving the scheme. That is not just the view of politicians. When the Bill was previously before this House, the Committee conducted some useful pre-legislative scrutiny evidence sessions. The evidence from the various business organisations was overwhelmingly to the effect that, whatever their views about introducing a BRS scheme at this stage in a recession, if there was to be added value it was crucial that there should be a mandatory ballot.

That point was made by a number of highly experienced Lords in the other place, and it has been reinforced by the CBI very recently. I previously asked the Minister about a letter from Richard Lambert, the director general of the CBI, to the new Secretary of State. In the context of the amendments, Richard Lambert states:

"You will not be surprised to hear that the CBI welcomes these changes. In 2007 the six hundred businesses that make up the CBI's nine English regional councils agreed that CBI should support the principle of business rate supplements."

They are not coming at that from a Conservative party political point of view; I disagree with them on that particular issue of principle. The letter goes on to state, however:

"They felt that if there is a need for new local infrastructure businesses should be able to contribute, where they see real value. However, there was overwhelming belief that this would only be acceptable if businesses had the safeguard of a mandatory ballot. This would ensure that supplements were affordable and only used for projects that would genuinely stimulate local economic activity."

In relation to the Lords amendments that we are debating, the letter states:

"In its amended form the Bill provides far more certainty for businesses about their long-term rate liabilities, whilst still enabling local authorities and business to work together to fund and deliver new infrastructure projects. In the current recessionary climate such improved certainty is absolutely essential. Government now has a real opportunity to demonstrate its commitment to helping businesses by allowing the changes voted through in the House of Lords to remain a part of the Bill".

I could not have put it any better. That is a persuasive case from the CBI, representing thousands of businesses, and it looks as if the Government are persistently turning a deaf ear to those arguments.

Certainty certainly relates to funding streams, but there must also be certainty for the businesses that are going to have to pay. The limit of 30 per cent. is in every respect an arbitrary one, because it is a question not just of the percentage that is funded, but of the amount that will fall to be paid by individual businesses. As has rightly been said, the nature of BRS schemes can vary. Some will be large, and some small, but as the Minister interestingly, and I suspect correctly, said, many involve significant capital expenditure. Even 20 per cent. of a very large scheme is a significant potential burden on businesses at a time when they can ill afford such cost burdens. That point appears to be missed.

I am sorry to have to say that the Government are also unwilling to seek greater business involvement. On Report in this House, there was a great deal of discussion about the possibility not only of having a safeguard for businesses through the mandatory ballot, but of mechanisms to ensure their greater participation in the development and ongoing oversight of BRS schemes. Ministers—previous Ministers, I hasten to add—uttered warm words about that. They said they would look at it, but nothing has emerged. I hope it may yet do so, but that does not give us much confidence that the Minister's words about wanting to encourage participation between local government and business are actually going to be met with action.

That is a profoundly disappointing stance for the Government to take, so it is important to set in place greater certainty for business than the Lyons review set out, precisely because of the potential impacts on business. If a package had been developed that gave businesses greater safeguards, perhaps their lordships would have come to a different conclusion, but it has not been developed, and given the history of how this matter has been debated—we will come on to another piece of history in respect of a later group of amendments—I do not have confidence that warm words will be met with action.

Against that background, I am sorry to have to say that we have to maintain that the Government have misjudged the mood and misread the evidence, and that if they disagree with the Lords they will make the Bill worse than when it came back to this House from the other place. That will be a missed opportunity and a great let-down, and it will send precisely the wrong signals to businesses in this country at the current time.

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Photo of Nick Raynsford Nick Raynsford Labour, Greenwich and Woolwich

It is a pleasure to follow Robert Neill. He referred in his opening remarks to his longevity in his post in comparison with my hon. Friend the Minister, who has just assumed her post. I agree, and I wish him even greater longevity in his current post in opposition. He argued initially that my hon. Friend the Minister used the same arguments as the Government had used in the Lords and that the Lords had disagreed with those arguments, and he offered that as a reason for going along with the Lords' position. What he failed to say was that the Minister deployed exactly the same arguments as her colleagues in the Commons did when this matter was debated here—and the Commons agreed with the Government, not the Opposition. Thus, we have a classic situation where the Commons has taken one view and the Lords has taken another, and I believe that the elected Chamber should prevail in those circumstances.

The Opposition argue that the business rate supplement is an inappropriate tax to introduce at this time, except in respect of Crossrail. We have heard before that classic illustration of the woolly thinking of the Opposition. If ever there was a scheme that involved a considerable imposition on the business community, it is Crossrail, which is a large and expensive—£16 billion—scheme. The BRS will make a significant contribution to that, albeit less than a third, and payments by business over many years will be involved. If the argument is that this is the wrong time for business to be making a contribution towards infrastructure investment, that argument certainly applies to Crossrail.

Of course, as the hon. Member for Bromley and Chislehurst knows perfectly well, business is supportive of Crossrail, rightly believing that the scheme is good for London, for Britain and for business, because it will create the circumstances that will enable economic growth to continue in London. That is why business is wholly supportive of Crossrail. Is it really credible to say that there are obvious benefits that business wants and welcomes from infrastructure investment, such as Crossrail, here in London, but that no such other investment that might be appropriate may be possible anywhere else in the country?

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Photo of Bob Neill Bob Neill Shadow Minister (Communities and Local Government), Deputy Chair, Conservative Party 3:00 pm, 17th June 2009

I thank the right hon. Gentleman for giving way with his customary courtesy. How does he reconcile the fact that the very same business organisations that support Crossrail also say that there should be a mandatory ballot anywhere else? It is because they know that Crossrail is a unique project that has been uniquely discussed among people in London.

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Photo of Nick Raynsford Nick Raynsford Labour, Greenwich and Woolwich

I must say to the hon. Gentleman that there is a total inconsistency in arguing that Crossrail is a good thing and should be supported without a ballot—we must remember that the business community is saying that there should be no ballot on Crossrail, because it is a relatively small element in the total funding package—and that that logic can apply in London, but cannot apply anywhere else. There is no sound logical basis for that particular case.

The logic behind having the BRS to support major infrastructure lies in the economic development potential. That is why the Government have introduced this measure. It is clearly right that if local authorities believe there is a case for a BRS, be it here in London or elsewhere, they should discuss the options with the business community and proceed only where there is clear, strong evidence that there are clear and definitive economic benefits. That is what I would expect to happen. The extent to which the business community is supportive of Crossrail in London is, of course, very much the product of the discussion that has occurred involving London's business organisations, such as London First. They have long campaigned for Crossrail and clearly take the view that it should be supported by a BRS. They recognise that far from improving prospects and certainty, a ballot could be very damaging.

The hon. Gentleman argued the case for certainty, but I put it to him that the one thing that would be utterly damaging to Crossrail would be to say, at this point in time, "Oh well, there has to be a ballot. We don't know what its outcome will be." That would lead to inevitable uncertainty about the funding of this hugely important project. He recognises that and business recognises that. That is why business is saying that in the case of Crossrail there should not be a ballot. It is not just business or people who recognise the importance of Crossrail who are saying that; the Conservative Mayor of London, Boris Johnson, is adamant that Crossrail should proceed with a BRS and without a ballot.

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

Will the right hon. Gentleman add, for the sake of completeness, that the same Mayor of London says that although he thinks that that applies to Crossrail, he has no desire for it to apply anywhere else?

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Photo of Nick Raynsford Nick Raynsford Labour, Greenwich and Woolwich

The hon. Gentleman will know very well that the Crossrail BRS levy will be in place for some 20 years. I think that Boris Johnson, however ambitious he may be—he probably has ambitions to take over the leadership of the Conservative party in this place—will certainly not be in place for more than 20 years as Mayor of London. There is no question of any other BRS case coming forward in London, because the Crossrail BRS will take in full the maximum amount that is eligible to be taken from BRS under the legislation. No wonder the Mayor is able to take that view in the case of Crossrail and London. The overriding logic is that what applies in the case of London should apply to other parts of the country.

I have argued about the issue of certainty. I agree entirely that certainty is important, but where the discussion is about a relatively small contribution towards a major project that is being supported much more substantially by other bodies, it would be perverse if an uncertainty about the outcome of a business ballot could jeopardise the prospect of that investment taking place. So the argument about certainty cuts the other way in cases in which there is only a small contribution from the business community through BRS and the project is being overwhelmingly funded by other sources. That is the reason for saying that if a relatively small contribution is involved, a ballot should be optional, rather than compulsory. There is no question of saying that there should not be a ballot—if the local authority believes that it is right to have a ballot, it should have the option to hold one—but it should not be obligatory. I believe that it is right to leave an element of discretion to local government in this respect.

We have heard a great deal from Opposition Members about giving more freedom to local government, but the hon. Gentleman is now trying to support the other place in imposing shackles on local government and not giving it the discretion in these circumstances to determine whether a ballot should apply. He may or may not recall—I certainly do—the evidence given to the Committee by Local Government Association witnesses. They said that there should be no ballots in any circumstances. I do not agree with that view, and I believe that those witnesses were wrong on that, but I just remind him about listening to local government and giving it appropriate discretion within reasonable bounds. I believe that the Bill does that, that this House was correct to support the Bill in its original form and that the Members of the other place were wrong to make their substitutions with their amendments, and I hope that this House will reject the Lords amendments.

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

I am experiencing déjà vu, albeit that some of the faces have changed; I, of course, welcome the new Minister. Unlike Robert Neill, I have had the opportunity to do that, even if I have not done so formally, in Committee, where we have been discussing another measure that affects local government.

The Conservative party's position, as set out by the hon. Gentleman, is that the BRS should be capable of being applied only in London for Crossrail. Throughout this debate, which is ongoing because a different conclusion was reached in another place, my party has said that it thinks that the BRS should be available to local authorities in other areas. However, given that these projects are likely to come forward as newer ideas and newer schemes that have not had the same amount of debate, and public and legislative scrutiny, as Crossrail, we feel that to give business confidence that its contribution is taken seriously a ballot is appropriate in all circumstances.

There are, thus, three positions on this matter—four if we take into account the position of the Local Government Association, as set out by my friend Councillor Knight, with whom I agree on all sorts of other issues. He does an excellent job as a local authority member on London, but I disagree with him on this occasion. Those four positions are: that there should be a ballot in no circumstances; that there should be no BRS beyond London and in respect of Crossrail; the Government's position that the BRS should be available but that a ballot is not necessary in all circumstances; and the Liberal Democrats' view, which has been agreed in another place, that a BRS is a useful tool and part of the package needed to move towards economic recovery in areas where infrastructure could play a big role in turning the economy round and that business would benefit from that, but that to demonstrate publicly that business supports a project, a ballot is necessary. I agree with the conclusion reached in the other place, and indeed my colleague and I put those arguments in Committee—and many hon. Members demonstrated their support on Report.

There are differences between the imposition of a further supplementary rate on business and the current situation in which businesses do not, in normal circumstances, get a say on the rate that is levied on them as a contribution to local services. We debated that in Committee at some length. We are asking for a further levy on business to fund specific proposals, and in those circumstances it is right to have a public debate—the consultation to which the Minister referred. It is clear from the information provided to us by representative organisations that the consultation is not felt to be enough—the matter should not end there.

We have discussed—and will again later—the BIDs system, which Mr. Raynsford introduced in his time in government. All hon. Members have been impressed by its successes around the country. The evidence provided to us before our detailed consideration in Committee of the success of BIDs and the contribution they make to their communities was one of the best presentations I have seen. It is appropriate to have a ballot in all circumstances when a BID is proposed. Consultation will have taken place and local businesses will have given their agreement in principle, but a ballot is still crucial. Therefore, it is strange to argue that in the case of BRS, a ballot may be inappropriate in some circumstances.

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Photo of Nick Raynsford Nick Raynsford Labour, Greenwich and Woolwich

In most BID cases—I cannot say all, because I am not sure of the precise figures—the BID levy is far and away the largest contributor to the BID project in the area. Voluntary contributions may be made by some property owners or the local authority, but the BID levy is the largest single part. Obviously, if the BRS is the largest single part of any scheme, there will be a ballot. That is the distinction. It is only in cases in which the BRS contribution is a relatively small part of the total that local authorities will have the discretion about whether to hold a ballot.

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

Clearly, that is the Government's argument—that it is possible to have a threshold beyond which the impact on businesses is not sufficient to necessitate a ballot. I do not agree. We could get into an argument about the right point for that threshold, but—as we have argued throughout—a ballot sends a much stronger message to business that the public sector, local government and the private sector must all engage with projects that will make a positive contribution to the future of an area. It is a clear and established system, and business is used to the BID ballot. It is much more simple and straightforward to say that a ballot would be held in all circumstances. For that reason, I am pleased that the other place accepted this amendment and I hope that this House, having considered the arguments expressed in Committee, which were ably supplemented in the other place, will accept that it got this wrong last time. We need to revisit this issue, and I hope that the Government will be slightly more flexible and agree that this scheme, which could make a real difference to communities around the country, should go forward on the basis of a ballot in all circumstances.

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Photo of Sarah McCarthy-Fry Sarah McCarthy-Fry Parliamentary Under-Secretary, Department for Communities and Local Government 3:15 pm, 17th June 2009

I thank the hon. Members who have contributed to this debate. I am sure that the hon. Members for Bromley and Chislehurst (Robert Neill) and for North Cornwall (Dan Rogerson) will not be surprised to hear that they have not managed to persuade me with their arguments.

The amendment concerns a discretionary power to be used by levying authorities of the business rate supplement, and levying authorities will be required to carry out a cost-benefit analysis of any proposals and to demonstrate the relationship between the costs and the benefits. We have already made the commitment that the statutory guidance will make clear the importance of levying authorities involving business in the development and throughout the course of the project.

The crux of the argument is whether it is right that business should have a veto on a project for which it is paying only a small percentage of the cost, but which has the support of the local authority and of others who are not in large businesses but will benefit from the project. That is the heart of the issue.

The amendment in lieu goes a little further, and would allow levying authorities the flexibility to do the right thing. It would also enable local businesses to understand why a local authority has chosen to hold a ballot when not required to do so—because of the 33 per cent. limit—or chosen not to do so.

I was a little confused by the contribution from the hon. Member for North Cornwall, especially his disagreement with Councillor Knight, who gave evidence on behalf of the LGA. The LGA's position was that there should be no ballot under any circumstances, and that the guarantee to local businesses that the power will not be abused is accountability to local communities. I thought that that was the Liberal Democrats' position and that they wanted to devolve decision making to local communities. It must be very confusing for voters when they hear one thing espoused in the House of Commons and a completely different view—

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

We want to see far greater tax-raising powers devolved to the local level, but this issue involves a specific levy on business rate payers, and in those circumstances there should be a ballot. It is essentially a democratic measure, which we support at whatever level.

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Photo of Sarah McCarthy-Fry Sarah McCarthy-Fry Parliamentary Under-Secretary, Department for Communities and Local Government

Nevertheless, the fact remains that the hon. Gentleman takes a totally different view from a fellow Liberal Democrat. Indeed, the LGA does not stop at not wanting a ballot. It also wants to raise the limit to 4p and for local authorities to have a free hand to decide what to spend the money on. The Select Committee also said that we should leave ballots to the discretion of local authorities.

The amendment in lieu creates the right balance. It would require a ballot if the contribution were more than 33.3 per cent., and introduce the additional safeguard that the local authority will have to set out in the prospectus its reasons to hold, or not hold, a ballot.

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Question put, That this House disagrees with Lords amendment 1.

The House divided: Ayes 267, Noes 219.

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Division number 152 Prime Minister — Clause 1 — Power to impose a BRS

Aye: 267 MPs

No: 219 MPs

Ayes: A-Z by last name

Tellers

Nos: A-Z by last name

Tellers

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Question accordingly agreed to.

Lords amendment 1 disagreed to.

Lords amendments 2 to 6 disagreed to.

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