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Clause 1

Business Rate Supplements Bill – in a Public Bill Committee at 10:30 am on 27th January 2009.

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Power to impose a BRS

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

I beg to move amendment 1, in clause 1, page 1, line 7, leave out ‘is’ and insert

‘and the majority of the affected business community are’.

Photo of Peter Atkinson Peter Atkinson Conservative, Hexham

With this it will be convenient to discuss the following: amendment 25, in clause 4, page 3, line 21, leave out from beginning to second ‘ballot’ and insert ‘a’.

Amendment 5, in clause 4, page 3, line 21, leave out—

‘where there is to be’.

Amendment 6, in clause 4, page 3, line 21, leave out ‘, the ballot’.

Amendment 7, in clause 4, page 3, line 24, at end insert—

‘(2) Subsection (1)(c) does not apply in relation to Crossrail.’.

Amendment 36, in schedule 1, page 22, line 36, leave out sub-paragraphs (a) and (b) and insert—

‘the arrangements for the ballot’.

Amendment 37, in schedule 1, page 22, line 39, leave out sub-paragraphs (a) and (b) and insert—

‘the result of the ballot’.

Amendment 10, in clause 7, page 4, line 32, leave out from ‘BRS’ to end of line 42.

Amendment 11, in clause 7, page 5, line 8, at end insert—

‘(6) This section does not apply to Crossrail.’.

Amendment 27, in clause 7, page 5, line 8, at end add—

‘(6) This section does not apply to the Crossrail project promoted by the Greater London Authority.’.

Amendment 12, in clause 8, page 5, line 10, leave out—

‘If a ballot on the imposition of a BRS is held,’.

Amendment 28, in clause 10, page 6, line 12, leave out from beginning to second ‘a’ in line 13.

Amendment 29, in clause 10, page 6, line 46, leave out from ‘BRS’ to end of line 13 on page 7.

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

I take this opportunity to formally welcome you to the Chair, Mr. Atkinson, and to thank you for the excellent way in which you conducted our evidence sessions. I am sure that you will agree that they were very useful, as well as informative and helpful to us. That leads us nicely to the matters that we will be discussing this morning and in future sittings.

Amendment 1, which is in my name and that of my hon. Friend the Member for Solihull, goes to the heart of the business community’s concerns about the Bill. As we heard in the evidence sessions, there are grave concerns about the ability of businesses to influence the decision on whether a supplement is enacted in their area. The Minister of State has been keen to point out that the consultation is a key part of the Bill, and that is welcome, but as we heard time and again, there are concerns that that does not go far enough. A ballot would be the ultimate reassurance to the business community that the extra contribution that it is asked to make will be put to what it believes is a good use.

The amendment would include the business community in deciding what is of recognised benefit and interest to an area by making sure that the majority of that community is satisfied that the projects funded by the supplement will promote economic development. As it stands, only the levying authorities need to be satisfied of that. It is important to make it clear in the Bill that, since the supplement will be a key contribution by businesses, they have a role in the consensus on moving forward.

Amendments 5 to 7 refer specifically to ballots, and insert the need for a ballot in all cases. As we went through our evidence sessions, one issue emerged time and again: while the business community had concerns about the timing of the Bill, they were prepared to accept that, where important projects were being taken forward in the local area, business should make its contribution. We heard that this form of property tax was perhaps not ideal and that there were issues regarding owners of property—as opposed to tenants—and how they could make a contribution. The fundamental concern was that the business community should have the right, through a ballot, to sign up to, or reject, any proposal.

When the British Retail Consortium was asked about a ballot, Jane Milne said:

“It is, as far as we are concerned, the single most crucial step as to strengthen the safeguards. There are already safeguards within the Bill, but we do not feel that they go far enough.”——[Official Report, Business Rate Supplements Public Bill Committee, 20 January 2009; c. 19, Q82.]

We also heard from the British Chambers of Commerce. Mr. Frost was asked whether it would be more reassuring to include a ballot. He said:

“Yes, to use that terminology, it is far less scary, because it gives the business community the ability to become involved. The worry with the other programmes that I have mentioned is that they would be seen as an imposition.”——[Official Report, Business Rate Supplement Public Bill Committee, 20 January 2009; c. 24, Q99.]

Dr. Grail, representing British BIDs, expressed concern that where a proposal for a business improvement district was being developed, if there were no ballots on a business rate supplement in the same area, businesses might feel that the only chance they had to prevent being overburdened by additional taxation would be to reject the BID. There were concerns that the lack of a ballot on a business rate supplement might influence how people would vote on a BID in the same area.

From our earlier sessions we heard that many Members, of all parties, felt that the BID process has been constructive and useful, and has achieved a great deal in areas where it has been enacted. Conflict between a BID process and a business rate supplement, if there were to be no ballot for a BRS, could be a crucial issue.

My hon. Friend the Member for Solihull and I were also keen to show through our amendments that we feel that Crossrail is a different case, so it was interesting to hear the evidence from the Confederation of British Industry—it feels that Crossrail is separate, as well. Karen Dee said:

“Businesses will vote for something if they see that it is of benefit to them.”——[Official Report, Business Rate Supplements Public Bill Committee, 20 January 2009; c. 39, Q163.]

We discussed the issue then and the feeling was that Crossrail is different: the process has gone on for a very long time and there has been a great deal of debate; and there has been a Bill through Parliament allowing us to look at the issues very closely. For that reason, we concluded that the provision for a ballot in all cases should not apply to Crossrail.

I am sure that the Minister will want to reply to that and say that we should either have a ballot in all cases or in none, but it is clear to Opposition Members that Crossrail is a unique project. Given its scale, scope and national importance, and the clear expressions of will and involvement by all parties throughout, it should be  treated separately. That is why our amendments would provide for a ballot in all cases other than Crossrail, including all new projects.

The key issue is to take the business community forward with us. The Local Government Association felt very strongly that it would be able to do so through debate and consultation with the local business community. I hope that that would be the case in many projects and that a ballot would deliver a yes vote, or would not even be approached, as there was already that consensus and the feeling that everybody was moving forward together. However, there still seems to be a concern in the business community that, without the ability to call for a ballot to focus everybody’s mind and ensure that the process is as constructive and inclusive as possible, the consultation might not prove as effective. So I am certainly very happy to commend the amendment to the Committee. From our point of view, the significant amendments in the group are 5 and 6, which would make a ballot compulsory, no matter what the size of the contribution being made by the BRS to the project.

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

Will the hon. Gentleman indicate who would qualify for such a ballot? I do not wish to do the Government’s arguing for them, but it seems that this is a rather complicated situation. Would the qualification be on the basis of being a leaseholder at a particular time, a freeholder or an owner of property, or of having a particular interest? As he will know, in relation to the existing business vote in the City of London, in my constituency, it is only relatively recently that the qualification has gone beyond simply those in partnership and sole practitioners of businesses to a corporate vote with a complicated structure. How does he envisage the ballot and the qualification for it working?

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

We are not seeking to change the conditions in the Bill about who would qualify for a ballot, and when we come on to talk about thresholds, we will discuss those on whom the rate will be imposed. The issue is that the Bill defines a set of circumstances that would trigger a ballot, which is when a certain percentage—30 per cent. or so—or more of the total scheme budget is to be funded by the BRS. Below that proportion, it will not be necessary to hold a ballot. Given the evidence that we heard and the written submissions that we had from the business community, there is a great deal of concern that the provision does not go far enough and there should be a ballot in all circumstances, and that is what my amendment seeks to introduce.

I will therefore be interested to hear the Minister’s response. I suspect that I can anticipate some of the arguments because we rehearsed them a little during the exchanges—I hesitate to call them debates—in our evidence sessions. I will obviously wait to hear what the Minister has to say, but I hope he will feel that the evidence that we heard in our earlier sittings is convincing enough to move to having a ballot in all circumstances. If I am not entirely satisfied, I may well seek to press some of the amendments to a vote.

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

Welcome back to the Chair, Mr. Atkinson. I am delighted to see that it is as sunny in London as it was in the north-east of England when I was there yesterday.

I have much sympathy with the amendment moved by the hon. Member for North Cornwall. In broad terms, my colleagues and I are minded to support it but we have tabled our own amendments. They are grouped here in a different formulation but they would achieve essentially the same objective. I shall speak to those as well as to the hon. Gentleman’s amendment.

The hon. Gentleman is right to say that the amendment concerns two of the Bill’s key issues. Principally, there is the question of whether there should be a compulsory ballot in all cases. My hon. Friends and I adopt the stance that to meet the Government’s objectives of ensuring that the BRS system has credibility in the business community, a ballot is essential in all cases. The threshold that the Government propose—that a ballot should be required only when the BRS will raise more than one third of the total cost of the scheme—seems to us, with respect, a somewhat arbitrary figure. One can think of schemes, particularly some of the joint schemes, that are proposed for transport infrastructure where a quarter or a fifth of the total cost would be a very large sum. In the evidence sessions, Government Members talked about transport schemes for bridges and tramways—that is substantial capital investment—and a quarter or a fifth of the cost would be a very substantial burden to place on businesses.

It may be, if the case is convincingly made, that businesses will consider it a worthwhile investment, and I do not have an objection to that. That is why my hon. Friends and I have always supported the concept of the business improvement district and would be happy to see it implemented further. The key test, however, is that businesses can buy in.

We are particularly concerned in the present economic climate about the potential imposition of large levies without a ballot. We are worried that, without a ballot, there will not be the necessary discipline on local authorities that choose to take up a BRS scheme, although in the current climate how many schemes are likely to be proposed is questionable. Witnesses from the Local Government Association could not think of any bodies apart from the Greater London authority proposing a project. However, as and when the schemes arise, it would be a useful discipline and serve to concentrate minds if local authorities knew from the outset that they would have to take the business community with them and produce something that is acceptable to a majority of them through the double-lock mechanism, which is a sensible safeguard.

I am grateful to the Minister for publishing the consultation guidance, as he promised he would, last Friday afternoon. I do not disagree with the aspirations that it sets out for the early involvement of the business community, but the fact is—I speak as one who has been involved in local government for much of my career—that some local authorities are more proactive and assiduous than others about involving their business communities. A mechanism that requires local authorities to engage with their local businesses, because they need businesses’ votes at a very early stage, would surely be more effective.

Photo of Derek Twigg Derek Twigg Labour, Halton 10:45 am, 27th January 2009

Can the hon. Gentleman give an example of a local authority that does not consult or involve its business community in any of its decisions? The local authority in Nottingham consulted the local business community, although it ended up disagreeing with it.

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

I shall give the Committee a highly publicised example that is now in the process of being overturned. When the previous Mayor of London chose to consult on the western extension of the congestion charge, he went through every statutory hoop and requirement that he was obliged to go through in such a way as to be proof against judicial review. It was clear that the businesses, and indeed residents, did not want the extension to be imposed, but the regime, which is the same as the one that will be in place for BRS, enabled him to ignore the opposition and go ahead. The fact is that, under the current rules, a situation could arise where a local authority—[Interruption.] I think the Minister wants to intervene.

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

I am trying to follow the hon. Gentleman’s logic. Given the example that he cites, his logic seems to be moving towards the proposition that there should be a ballot in London, as elsewhere, if there is to be a BRS. That appears to contradict some of the amendments that he will speak to later.

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

I am grateful to the Minister for raising that point, but if he follows my argument, he will see that that is not the case. I shall discuss later why Crossrail is a different case. Under the present regime, if a local authority has the political will to impose a scheme, it is not obliged to take the majority of businesses with it. The evidence and the example that I cited demonstrate that that was the case under the previous Mayor of London.

The proposal in the Bill and the existing arrangements give local authorities the opportunity to decide, by a narrow political majority, to implement a scheme, even though it might have been rejected by businesses or there is clear evidence of their opposition. It would be better to test the proposal and get businesses on board. I hope that the hon. Member for Halton is correct in his aspiration that local authorities will not go down a route that will bring them into conflict with local businesses, but localism always carries that risk. Businesses in the present climate need to have some protection against that.

Another point that worries many businesses and is flagged up in the consultation document is that, without the ability to have a ballot, there is a risk of an accumulation of burdens being placed on them. We will come to automatic set-offs for BID levies later, but the BRS and BID schemes, as well as the possibility of community infrastructure and workplace parking levies, could impose a cumulative burden. A real concern in the business community was demonstrated throughout the evidence sessions about that cumulative burden being, for many businesses, the straw that breaks the camel’s back.

For all those reasons, if the Government are genuine about giving local authorities a power to raise revenue that is truly and demonstrably additional, it is important that the local businesses who pay—who may pay substantial sums—are able to have a say on whether they are  convinced that there is genuine additionality. If the case is made out and the local authority engages with its business community from the start, it is much more likely to get a result that everyone buys into, which would be to everyone’s advantage.

I hope that the Government will think again about the amendments. I cannot for the life of me see why they would not. The Minister will probably say that he has come to a pragmatic and rational decision that a third of the cost is a reasonable ballpark figure for the threshold. It might be, but he could equally say the same about a quarter or a fifth, because an element of arbitrariness is inevitable in any threshold. Some sort of de minimis exception might be better, and the Minister conceded that we could discuss that. If there is not to be such an exception, there should be a ballot.

On why we do not take that stance on Crossrail, I am perfectly happy to say that Crossrail is and should be an exception, for the perfectly good reason that Crossrail is a project that has been discussed and consulted on within London among business rate payers and voters. London has had an election—a democratic process—in which all the major party candidates standing for Mayor were committed to Crossrail and the funding package for the project. Londoners had a chance to have a say on Crossrail.

Photo of Sadiq Khan Sadiq Khan The Parliamentary Under-Secretary of State for Communities and Local Government

Will the hon. Gentleman remind us how many people with businesses inside London but who live outside London had a say in that decision?

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

It is interesting that the Under-Secretary says that, because of a point that struck me during the evidence sessions. Is he hinting that there should be the reintroduction of the business vote in such circumstances? I am sure that his hon. Friends would not like that. My answer to him is that not only was there a democratic election in London, but all the representative business bodies supported the Crossrail funding package. Equally, those same people said, “Although we accept that it works in London for Crossrail, we do not want it imposed elsewhere.”

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

If my hon. Friend will allow me to half-answer the Under-Secretary’s question, of course a significant number of businesses in the City of London, with people who are employees or partners of the business but who live outside, were able to have their say. I accept that it was by no means an entirely satisfactory arrangement, but an important cross-section of the business community had its say—including those in the business community who live outside London. The City of London corporation, as the Under-Secretary and my hon. Friend will be well aware, keenly supports Crossrail, albeit not without making certain criticisms—for example, about the route, which we shall discuss later. None the less, in that rather unsatisfactory way that we have in the context of the corporation, the business vote has had a certain say. In fairness, I should say that the business community is very much in favour of Crossrail, and wants it to be built as soon as possible.

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

I am grateful to my hon. Friend for that. I accept his point that, inevitably, unless return to the ‘50s system of a separate business vote, which no party  is proposing, that arrangement is imperfect. However, in a large area of London, there was the ability for a great number of Londoners, including a number of business rate payers—not all, of course, because some live outside the boundary—to have a say.

In addition, because of how the Crossrail process has been gone through—by the previous Mayor and the current on, as well as the candidate for the Liberal Democratic party and others—there has been a genuine attempt at dialogue and engagement across the political parties and a broad political consensus within London. That was reflected in support for the project before the scheme was brought forward by the business community—London First, the London branch of the British Chambers of Commerce and the CBI supported a BRS as part of the funding package. They were not saying that it was an ideal measure, but in the case of Crossrail, they said that they were prepared to chip in and that that was a mechanism through which they could move the project forward. That is a pragmatic and sensible enough view, but it does not mean that that approach is appropriate anywhere else in the country.

What amused me in part of the Under-Secretary’s comment is that he seemed to present my hon. Friends and I as people who are denying the rest of the country a great opportunity. I suggest that what we are seeking to do is to save the rest of the country a potentially great burden. The Government are trying, through characteristic sleight of hand, to take the consensus and agreement that a BRS scheme is an appropriate mechanism for Crossrail and use it as a stealth device to increase tax burdens elsewhere in the country, where we know from the LGA there is no demand. There is a demand in London—the Mayor of London submitted evidence saying why that was so, as did London business. There is no such evidence elsewhere.

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

Stealth tax? I am struggling with that. It is a common phrase that we hear from the party opposite, but how can the hon. Gentleman describe a business rate supplement as a stealth tax when there has been a public report from Sir Michael Lyons, a White Paper, and parliamentary scrutiny in both Houses of the legislation? If a local authority believed that a business rate supplement was appropriate for its area, there would be lengthy discussion, formal consultation and, in some cases, a ballot. I simply cannot see how this measure merits the description of stealth tax, which surely implies something that people were not aware of, not expecting and were suddenly confronted with. Does the hon. Gentleman not accept that, for the purposes of serious scrutiny, that is simply not helpful or accurate?

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

I am surprised that the Minister departs from his normal precision in following my argument. I appreciate that he may have had one or two little distractions over the weekend, but perhaps he could follow my argument carefully. I accused the Government, and I do not resile from the accusation, of using the consensus on the use of the BRS as part of the Crossrail funding mechanism as a stealth device to then impose a tax-raising power elsewhere in the country, where there is not the same level of demand as has been demonstrated in relation to London and Crossrail.

That can be described as a stealth device for this reason: although there has certainly been debate in the broader context of Lyons and the White Paper about  the BRS, until the Government published the Bill, there was nothing to suggest that they intended to make the link between the funding of Crossrail, which has had its own separate Act of Parliament, and rolling out the BRS power elsewhere in the country. That was not necessary; the two could have been decoupled. The Government could have introduced a Bill to fund Crossrail and then a separate Bill to consider the broader principle of rolling out BRS elsewhere in the country. That is the stealthiness of which I accuse the Minister.

Photo of Nick Raynsford Nick Raynsford Labour, Greenwich and Woolwich

The hon. Gentleman presents his position as defending the rest of the country from the imposition of a burden. I shall give him the benefit of the doubt and assume that he does not see his role as a London MP as imposing an unreasonable burden on London, because that would be the logic of his position. He clearly does not think that, because he thinks that Crossrail will deliver benefits which are such as to outweigh the cost on business of paying the BRS in London. Why does he believe that a similar arrangement should not be possible outside London?

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

With respect, the right hon. Gentleman’s logic is flawed. In the case of Crossrail and London, where there is a broad consensus, it is perfectly reasonable to go down a route that was established before the Bill was introduced: there was commitment and sign-up to a BRS part-funding the package for Crossrail. However, the Government then coupled the Crossrail project with rolling out the broader Lyons proposals, which was not necessary.

Why do I say that we are protecting part of the country from a burden? I say it simply because, without a ballot in all cases, there is the prospect of a BRS being imposed on businesses in areas where there is no demand. In London, the consensus had arrived before the Bill appeared. What the Government are doing is using inverse logic—saying that because there is agreement in London without a ballot, we do not need a ballot anywhere else. That is the false logic that is being deployed in the debate, not any argument put by the Opposition.

Photo of Mark Field Mark Field Conservative, Cities of London and Westminster 11:00 am, 27th January 2009

Will my hon. Friend make it clear that if we were discussing the Bill 10 years ago—in other words, before the Crossrail Bill had been considered—we would have been arguing just as forcefully for a ballot on Crossrail? However, we are now a long way down the line in the Crossrail process. The amendments are therefore geared towards involving the business community through a ballot system. As my hon. Friend rightly says, there is a certain level of arbitrariness regarding the threshold—the proportion of the overall spend—before a ballot is held, but we want to involve business as far as we can through a ballot.

Crossrail is a bit of a red herring. I can understand why Government Members are making a lot of it, but the reality is quite straightforward, because we are so far down the line, for want of a better phrase, in relation to Crossrail. Had the Bill been introduced 10 years ago, Crossrail would clearly have been part and parcel of the provisions on ballots that we are now trying to establish.

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

I very much agree with my hon. Friend. We have to be realistic as far as Crossrail is concerned. We are where we are, and if we had not adopted the stance that we did in relation to Crossrail, no doubt the Government would have accused us of trying to block or sabotage Crossrail. They cannot do that, because we made it very clear that we are realistic about where we are with Crossrail, and that we want to get on with it. What they cannot do, although they are trying, is to use Crossrail as a shield against criticism of their proposals elsewhere in the country. If they want to deflect criticism or reduce our criticism of their proposals for other areas of the country, they could do so by accepting the amendments that we and the hon. Member for North Cornwall have tabled providing for a ballot in all cases. There would then be an appropriate safeguard for businesses and the criticisms would have far less force. They choose not to do so, so the situation is of their own making.

Photo of Neil Turner Neil Turner Labour, Wigan

I would like the hon. Gentleman to clarify two points. First, he talks about the consensus within London, but every party was in favour of Crossrail. How can one judge the degree of consensus when the people of London did not have the opportunity to vote against it? All the candidates in the London mayoral elections were in favour of it. Secondly, may I remind him that elections in London are held once every four years, but in the rest of the conurbations of England we have elections every year? These projects will take place over a number of years. It will tend to be large projects that are supported by the supplementary business rate, so there will be the opportunity for consultation over a number of elections. The situation will not be the same as in London, where a project could be introduced after an election and be sorted out before the next one.

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

I have great respect for the hon. Gentleman, but he has not been listening to some of the previous arguments. The fact that all the major parties stood on the platform of supporting Crossrail—for exactly the reason that my hon. Friend the Member for Cities of London and Westminster gave, that everyone accepted that we were where we were—demonstrates that there was substantial buy-in among the voters. People could have voted for Respect, and I suspect that the UK Independence party and the British National party were also rather critical of Crossrail, but they did not, for obvious reasons.

We also had evidence from representatives of the London business community that in the circumstances, to kick-start Crossrail, London businesses were satisfied that the mechanism was one that they could live with. The fact that there are annual elections to the unitary authorities elsewhere in the country does not alter the argument. It is perfectly fine and helpful to have elections so that voters—the domestic council tax payers—can have their say on whether to have a council that continues with a BRS scheme. I do not have a problem with that, but that is no reason to say that non-domestic rate payers—those who contribute not through council tax, but through the BRS—should not have a ballot, so that they can have their say. The two are not mutually exclusive in any way.

If the Government conceded the principle that there should always be a ballot for a BRS scheme to be imposed, none of this argument would be necessary.  The local authority could go forward, taking the domestic council tax payer vote with it in the elections in the ordinary way, but it would also be able to get buy-in from the business occupiers through a ballot. There would not be the potential conflict that the Government’s scheme gives rise to.

In a rather larger nutshell than I had intended—although I hope I have enabled hon. Members, including Labour Members, to vent their views—those are the reasons why we proposed our amendments and have sympathy with those tabled by the hon. Member for North Cornwall. We certainly wish to see votes on such matters in due course. The other amendments in my name in the group are consequential, relating to the holding of a ballot in every case apart from Crossrail. I hope that that deals comprehensively with this group of amendments.

Photo of Brian Binley Brian Binley Conservative, Northampton South

It is a pleasure to serve under your chairmanship for the first time, Mr. Atkinson.

I do not want to enter the private grief of Crossrail as regards London’s payment for it, but outside London many people are dubious about the scheme. They fear that it will cost about £25 billion, perhaps more, but do not see it helping them in any way. They feel that that amount of money could be much better used on infrastructure elsewhere.

Having got my bit about Crossrail out of the way, let me explain why a ballot of businesses is vital if we want acceptance of the concept from the business community. I need not tell the Minister about the need to reassure business, because the evidence is plainly in front of him, from almost every business organisation in the country. From my own anecdotal evidence, local business is frightened to death of giving government—particularly local government, which has not proved to be the most efficient instrument in this country for moving our society forward—the ability to raise even more money from the community, particularly the business sector and at a time when Government support for local authorities has been reduced over the years in percentage terms.

Let me tell the Committee why the business community is so concerned. That concern surrounds two major areas. The first concern arises from the appalling episodes and examples of consultation undertaken by local government the length and breadth of the country. We have one at the moment in Northamptonshire, where the portfolio holder responsible for the consultation has herself said that it has not been well organised. In fact, I have not seen one local government consultation that has been well organised.

The thrust of the Government argument seems to suggest that it is okay not to hold a ballot, if less than 33 per cent. of the total cost is to be borne by business, because there will be consultation. I would like the Minister to present evidence of quality consultation in local government. I would like him to tell me how many people with an expert knowledge of the art of consultation are employed by local government. I would like him to show me where consultation has been accepted by the local populace as being effective and meaningful, because in my experience the opposite is true.

Having worked in the business of marketing and public relations for most of my adult life, I look at the consultations emanating from local government in my  part of the world with horror—horror at the amateurish nature of the whole process every time. The Minister needs to reassure us as to why he thinks there will be this massive step change in the quality of local government consultation in order to pursue his argument that, in the context of projects involving a contribution of below 33 per cent. from business, such consultation will allay those fears. I assure him that it certainly will not.

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

My hon. Friend makes some interesting points about consultation. Does he not accept that, particularly in relation to quite a few local programmes, all too often there are some deep-rooted interests whose concern, however much consultation they get, is the outcome of a particular inquiry? How would he address the fact that there is always a small minority that can be consulted until the cows come home—in whatever efficient or inefficient way—but that ultimately, if the outcome of the inquiry does not go its way, it feels that it has not had a fair say?

Photo of Brian Binley Brian Binley Conservative, Northampton South

I thank my hon. Friend for that interjection because it raises an important point. The obvious answer is to bring in professionals. However, to do that throughout the whole nation would be massively expensive. The alternative is to ensure that local government is much more equipped to deal with consultations from its own perspective. It should not see a consultation as simply asking the questions to get the answers that it wants. Furthermore, in a consultation where there has been a sizeable view in opposition to the council’s plans, it should not then override it as being meaningless and ignore it. There is no reason why it should. There is no law that says, “You have to take note of a given consultation.” There is also no sanction where people who do not have a vote are involved in that consultation, and therein lies the serious problem. The whole question of consultation therefore needs to be looked at as a separate issue in local government. However, consultation is not the answer to reassuring local businesses regarding projects where the projected amount that they will need to pay is less than 33 per cent. by the levy of the rate. The second reason why they need reassurance is that very fact in itself.

I wish I could tell the Committee that the projections of a given capital project made by local authorities were worth putting great faith in. The truth of the matter is that, over the length and breadth of the country, assessment of projects by Government, and especially by local government, have been way off target when the total is presented at the end of the project.

I shall cite a situation where a local authority says that the cost to be generated from a local rate of a given project is only 30 per cent. of that rate, so there is no need for the ballot. We then find, after the ballot is taken and the rate is levied, that the cost of VAT contribution turns out to be less, in total, than was projected by the local authority. The business rate contribution therefore becomes 40 per cent. of the total. Do the Government then give that money back? There is nothing in the Bill to say that they should. Again, the situation will simply be created where business feels that it has been conned.

Business sees itself as the milch cow for the Government and has done for some time. Not only are we going to see increasing congestion charges, much of which will  be paid by business, but workplace parking levies are being introduced as well. We are seeing charge after charge being levied on business, as though it can continue to provide a massive share of the money spent by Government at all levels.

The Bill will simply open up the fear that, create more suspicion that and add to the thought that the Government’s only concern for business, when it comes down to action rather than words, is that it is a milch cow and is there for local government to grab whatever it can in its interests, and not necessarily in the interests of business. The only way to convince business that it has a proper say in this matter is to give it a proper vote on every project that requires a supplementary business rate.

Photo of Peter Atkinson Peter Atkinson Conservative, Hexham 11:15 am, 27th January 2009

Before I call the Minister, as the clause before us is central to the Bill, if hon. Members want to debate it I suggest that they do so now. I will accept a more wide-ranging debate, rather than wait for a clause stand part debate at the end. That is a warning shot for anybody who has anything else to say, before I call the Minister.

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

I welcome you to the Chair, Mr. Atkinson, particularly as we enter the scrutiny period of the Bill. Like other hon. Members, I look forward to serving under your chairmanship and that of your co-Chairman, Mrs. Dean. It is great to see such a strong scrutiny Committee, made up of hon. Members who have long experience in local and national Government, from the north and south of the country, and those with business experience that they can bring to bear on our deliberations. That can only strengthen our scrutiny of the Bill, and I look forward to that.

We are probably all surprised at the level of interest in this Bill in certain sections of the media over the weekend, and look forward to the amendments that may be tabled in the other place when the Bill arrives there.

The amendments that we are debating strike at the core of the Bill, which is the proper relationship between a local authority and the businesses in its area, and the degree to which there is a common, shared interest in the future prosperity and economic development of that area. I think that all hon. Members would accept that, as we heard in evidence from local government and business last week, we are considering the legislation in an era that is different from two decades ago. We must be careful not to base our judgments about this legislation on outdated mindsets, or myths about local government wanting to soak local business for everything it can get. Frankly, we put have put those days well behind us, and I was particularly encouraged to hear confirmation of that from the business organisations that gave evidence last week.

We need to deal with the sort of relationships that are currently in place and, through this Bill, how they need to be strengthened. We are legislating for the potential use of a supplement and a power not just next year or the year after, but—if appropriate and if determined by a local authority with its local businesses—at any time in the future, should there be a strong case for doing so.

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

On that general point, is the Minister personally uneasy at the idea that we lack a democratic safeguard in this regard? He is quite right that local authorities work much more closely with their local businesses in trying to plan for the regeneration of particular parts of the local authority area. However, as we have repeatedly pointed out, there are many business men and women who do not live in the locality. In other words, they have no say on the election of a particular authority. Does the Minister instinctively feel uneasy at the lack of any democratic safeguard, notwithstanding the desire of business and local authorities to work together more closely?

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

No, because the democratic safeguard is in the elected local government. The requirement is for elected local government to account for its decisions, and to be subject to scrutiny, public cross-examination and challenge and, ultimately, to being voted out of office for those decisions. That is why the hon. Gentleman will see that, when we get to clause 2, the proposed levying authorities all have that direct democratic mandate. Some have argued that transport authorities ought to have similar powers, but they do not have a direct elected mandate—the democratic safeguard. In the end, we elect our politicians locally and nationally to make decisions that sometimes have to mediate or adjudicate between competing interests, which can sometimes never be reconciled. Ultimately, our job is to stand up and account for our decisions. If people do not like them, there is a strong debate and then, essentially, the opportunity to get rid of us. I am not uneasy in the same way as the hon. Gentleman is, because we framed the Bill to be based in democratic elected local government. That is local government’s proper role, and the proper place to have the ultimate accountability.

The hon. Member for North Cornwall moved amendment 1 and indicated that he might want to press it to a vote. I hope that I can dissuade him from doing so. I shall then come on to the two central issues at the core of our debate and the other amendments: whether there should be a ballot in all cases, and whether London’s Crossrail is an exception.

Amendment 1 is directed at the question of economic development. I hope that the hon. Gentleman will find that the draft guidance, which was published on Friday, underlines what is already in the Bill. It clearly says that a business rate supplement and the funds it raises must be spent on projects that promote economic development. Before we get on to where we disagree, let me attempt to stake out territory that I am confident we agree on.

First, all members of the Committee and all our parties would accept that local authorities have a central and important role in the economic development and prospects of their area. Sir Michael Lyons was strong in his conclusion on that in his recent report. The all-party, Conservative-led Local Government Association is strongly of that view. The sub-national review of economic development and regeneration, which was published in summer 2007, concluded that. Lyons and the sub-national review, on the proposition that local authorities have an important role and require policies and some freedoms in order to play that role effectively, said that they should have the power to raise additional funds to promote economic development. That is precisely what the business rate supplement will allow them to do.

While I am on areas of agreement, I was encouraged by some words of David Frost. I was not surprised, because I know the British Chambers of Commerce and its director-general well. He confirmed that

“in a number of parts of the country...there is a need for more local determination and...the ability to raise additional revenue from the business community”——[Official Report, Business Rate Supplements Public Bill Committee, 20 January 2009; c. 21, Q85.]

The proposition in amendment 1 is to prevent a business rate supplement from being levied unless those businesses that will pay the supplement are satisfied that the project to be funded by the BRS will promote economic development of the area. I agree with that proposition, but I can say to the hon. Member for North Cornwall that it will not come as a surprise to any businesses. As part of the different relationships that are already in place from a couple of decades ago, local authorities already develop and consider their long-term plans for economic and social development, and environmental improvement, through their sustainable community strategy, local strategic partnerships and detailed discussions with business. In almost every area of the country—every one of us could point to significant business people in our own areas who are playing a part—business is involved with those discussions and ultimately, the decisions that local authorities take.

The latest example is the set of local area agreements that the Government agreed with local government last year. In all except one of the 150 local area agreements, local authorities, in wider conversations and with wider support, have picked priorities for themselves that reflect concerns about improving their local economies. For example, six of Cornwall’s 28 local area agreement priorities are economic in nature; three of Bromley’s 30 targets are focused on the economy. The hon. Member for Cities of London and Westminster may be interested to know that his local authority is the only local authority out of the 150 in the country not to make any of its priorities economic. That is a matter for the local authority, and no doubt it has discussed it with local businesses.

Coming back to the BRS, that sort of discussion and consultation will be part and parcel of any consideration that a local authority gives to the potential role for a business rate supplement, even before the formal consultation stage, which we shall come to later in our deliberations. Any proposal will need to explain clearly why it is necessary to consider the project, even before consideration is given to funding it. The Bill and the draft guidance that I have published make it clear that any proposed project plan should set out how the project will improve the economic development of an area. I sympathise with the proposition of the hon. Member for North Cornwall, but in practice the amendment would mean that the local authority would need to demonstrate that the majority of the business community that might be affected by a BRS was satisfied that it would promote economic development before it could go ahead. It is difficult to see how one could satisfy that requirement without a ballot.

In other words, the local authority would be balloting on whether the majority of the businesses thought that the project proposed would contribute to economic development, and not on whether businesses accepted or agreed with the idea that a BRS might play a part. That is clearly absurd. The amendment would lead to serial balloting in the process of a BRS and that is its  ultimate flaw. I shall come to the arguments of principle regarding balloting in a moment, but if the hon. Gentleman presses amendment 1 to a vote, that is the logical and practical flaw in his proposal.

Not least because of my local involvements, but also as a Minister, as the Committee would expect, I understand keenly and clearly the concerns that businesses have about the business rate supplement, although they are from time to time rather overstated, which does not necessarily do their case much good.

Photo of Brian Binley Brian Binley Conservative, Northampton South

I find that remark rather surprising. Is the Minister saying that a robust opposition to a given Government proposal will be less well favoured because of its robustness? Is that what he is telling us? If so, that is a worrying situation.

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

No—quite the opposite. The strength of the case and the extent to which it is likely to be carried in the decisions that the Government or this House take rest on how well it is put, not simply on how strongly it is put. It is as true in this field as in any other that organisations sometimes do not best serve their cause by overstating the concerns and anxieties that are at stake. Nevertheless, in framing this Bill we have taken the concerns of business seriously.

One of the safeguards in the Bill, which we will come on to in more detail, is the requirement for any local authority, if the BRS is expected to contribute more than a third of the total proportion of any project cost, to be subject to a ballot. That is despite equally strong arguments from the all-party Conservative-led Local Government Association that there should be no requirement for a ballot, and that any ballot should be a decision for the local authority itself, as appropriate. The all-party Select Committee also takes a view that is different from ours. It does not seek the requirement to have a ballot where a project’s cost amounts to more than a third from BRS.

The evidence sessions bore this out. On the one hand, we had the CBI saying that we should have ballots in every case, whatever the contribution from the BRS. The LGA argued that ballots are unnecessary and should not take place unless the local authority decided it was appropriate. The most interesting, and overall perhaps the most balanced, evidence came from the director general of the BCC. He was clear with us in recognising the constructive relations that generally exist between local authorities, business organisations and the business community now. He also recognised the concerns that businesses have about the prospect of legislation enabling a BRS.

However, the director general ended by confirming to the Committee, in response to questions from my right hon. Friend the Member for Greenwich and Woolwich, that the BCC accepted the third threshold proposed in the Bill. That threshold is designed to recognise that business should not have a blanket veto on any business rate supplement as a contribution to a major project for an area. However, it is also designed that, where a business is likely to do more of the heavy lifting in the financing of a project, it should have that reassurance and extra opportunity to vote on its introduction.

Photo of Bob Neill Bob Neill Shadow Minister (Communities and Local Government), Deputy Chair, Conservative Party 11:30 am, 27th January 2009

I understand the logic about the heavy lifting, but will the Minister address the point, raised by my hon. Friend the Member for Northampton, South and other Members, that the assessment of heavy lifting should perhaps not be in terms of the proportion of the expenditure as borne, but also of the quantum? One can envisage some schemes where a quarter will amount to a financial contribution that could fairly be described as heavy lifting.

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

We deal with quantum concerns with the Bill’s proposal that there will be a 2p cap on the scale of a business rate supplement. That is an area where we were again urged strongly by all parties in the LGA to go a lot further, and we will come on to debate that.

Photo of Nick Raynsford Nick Raynsford Labour, Greenwich and Woolwich

Does my right hon. Friend not think it slightly odd that the hon. Member for Bromley and Chislehurst, who argued that Crossrail should not be subject to a ballot but that every other scheme should be, is now suggesting that the quantum of the contribution should be a factor? There can be no scheme that I can imagine in which there is a greater quantum of contribution from business than Crossrail. Is that not an indication of how hopelessly confused and intellectually bankrupt the Opposition’s case is?

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

Quite so. I also think that it exposes the weakness of an approach that says that one specifies quantum figures in legislation because it is difficult to do so in a way that is appropriate for all parts of the country. My right hon. Friend is right. The Bill is framed so that, in the case of Crossrail, the quantum across Greater London would raise about £178 million a year. The quantum of a similar supplement raised across Northamptonshire would be just over £9 million.

Frankly, we in this House cannot legislate on that sort of thing without creating an inflexibility that would be totally dysfunctional. I understand the quantum question being a concern of business, but we are dealing with that by a cap on the size of the levy and by a threshold of a £50,000 rateable value above which businesses would be liable for any business rate supplement—at a stroke taking out the vast majority of businesses in any area.

Photo of Brian Binley Brian Binley Conservative, Northampton South

What analytical statistical base did the Government use to set its figure of a third as the cut-off point for a ballot? I assume there is an analytical base, and I would love to have it explained.

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

It is a matter of studying the impact assessment of any business rate supplement and, in the end, a judgment. We believe that the judgment strikes the right balance, as I described earlier. I shall come to that in a moment, but now I would like to turn to the two principal questions that underpin the different amendments of the Conservatives and the Liberals.

First, both parties’ amendments propose that there should be a ballot in all cases in which the levying authority wishes to introduce a business rate supplement. Second, they propose that the requirement to have a ballot should not apply to London.

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

The Minister is accurately setting out the position of my party and, I believe, of the Conservatives, except in one respect. He just said that the ballot requirement should not apply to London, but that is not what our proposal says; it says that it should not apply to Crossrail. At some point in the future, when Crossrail has been funded and we are all happily taking trains through the heart of London, if other projects emerge, they should be subject to a ballot in the same way. We were specific about saying Crossrail, not London.

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

I shall deal with in a moment. To all intents and purposes, for the discussions and the proposition before the Committee and before London—the business rate supplement—the proposal is to levy to the 2p limit. That proposal comes from the Mayor and will fund Crossrail for 24 years. The hon. Gentleman may be taking a very long view and seeking framework legislation for 25 years plus, but the core of the argument is not changed by the technicalities of his slightly deficient amendment.

Our third requirement for a ballot applies across the board—to be clear, it is not limited to any type of project or to any geographical area. The two principal questions raised by the debate are whether the Committee accepts that any contribution—however large or small a proportion of a project—from a business rate supplement should be subject to a vote and, secondly, whether we accept that Crossrail is unique and therefore warrants unique treatment in the legislation. I am disappointed that the hon. Member for Bromley and Chislehurst is still arguing from the Front Bench that London is an exception to the rest of the country—particularly when Crossrail is of national significance, not least with the national taxpayer putting in the largest single contribution to the funding package.

I cannot accept what underpins the hon. Gentleman’s basic argument: that there should be one rule for London and one rule for the rest of the country. In the gentlest terms, that is such a narrow view—one, unfortunately, that we suffered throughout the 1980s and 1990s, when Government economic policy could barely see beyond the limits of Greater London and the south-east, and through which so many of the economic problems and economic potential of the rest of the country were largely ignored. I do not want us to legislate for the BRS in a way that says, “We are interested in London, we will legislate for London and the rest of the country can go hang”. I cannot accept that as a basic proposition for the hon. Gentleman’s amendments.

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

I do not wish to go down the narrow alleyway of a history lesson, but the Minister will be aware that many people in his own party are expressing concerns today at the rescue of the banking system—at the perception that it is a London rescue, with a lot of other industries obviously having great difficulties with the credit crunch.

I go back to the point I made earlier to my hon. Friend the Member for Bromley and Chislehurst. If we were discussing this Bill ten years ago, no doubt Crossrail would be part and parcel of these amendments. In other words, we would not be making any exception for Crossrail. It is simply a fact that Crossrail is so far down the line that it should be given the go-ahead and not necessarily be subject to the ballot safeguards that we  regard as important. Looking forward—I go back to what the hon. Member for North Cornwall had to say—we are not trying to make London an exception; we are making the specific Crossrail project an exception.

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

For the purposes of this debate and Bill, London and the Crossrail project are the same thing. To divide them is a false basis for argument. I am disappointed that the Liberal Democrats are taking such a London-only view, essentially overlooking the interests of vast swathes of the country, some of which is led by Liberal Democrat local councils.

Let me come to the two principal questions—first, the one of balance.

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

With respect to the Minister—because I am sure he does not want to misrepresent what has been said—if he is saying that there is genuine concern for the rest of the country, I accept it. Can he answer why, if we are to pursue an evidence-based approach, there is no evidence from the LGA of anywhere else in the country with a desire to take up the powers proposed for them?

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

Surely the hon. Gentleman accepts that any Government ought to be looking to the long term and ought to be capable of legislating and coming up with policy that is not simply in response to the demands placed on them. I hope that in this passage of the Bill we will see a different approach from his party from five years ago, when it raised exactly the same opposition to business improvement districts, through which we set a new framework, allowing local authorities to discuss and develop with local businesses propositions to benefit their areas. It was a visionary move and forward-looking legislation from the Government—and, in particular, from the then Minister who led it through the House, my right hon. Friend the Member for Greenwich and Woolwich—which has proved a great success over recent years. There are 67 business improvement districts in place, many in areas led by Conservative local councils. I encourage the hon. Gentleman to take that longer-term view of the legislation that the Committee is considering this morning.

Photo of Brian Binley Brian Binley Conservative, Northampton South

Is the Minister not raising the same concern that we are—that the BIDs project was specifically designed to involve business at every stage of the process?

Photo of Brian Binley Brian Binley Conservative, Northampton South

I did not. I was not here. I will speak for myself on this matter, so I do not want any of that nonsense.

Business is involved at every stage of the BIDs process, which has the effect of bringing business into the humble issue of community and its impact on the people whom we serve. That is the opposite of this exercise, which will drive business away because it will not be involved. It will just see the price at the end of the day and know whether it was right or wrong, whether it has been balloted or not, quite frankly. So the Bill is not doing what BIDs did, and that is one of its failures.

Photo of John Healey John Healey Minister of State (Department of Communities and Local Government) (Local Government) 11:45 am, 27th January 2009

I am grateful to the hon. Gentleman, who gives me the cue to go on to BIDs. He encourages me to use BIDs as a model, and others have cited them as the proper model for a BRS. However, the BRS is unlike BIDs in a number of ways. BIDs have a time limit of five years and their footprint is essentially localised. They are often there to support revenue funding for things such as improvements in local streets and police community support officers—things where the benefit to the businesses involved are direct and immediate. Unlike BIDs, schemes funded by the BRS—Crossrail is the clearest case in point—are likely to be considered appropriate for much wider areas and to offer much wider benefits, beyond the immediate interests of the businesses in that area and, because of the likely time scales, beyond the interests of those businesses that may, if the BRS is introduced, be paying it. So the BRS is different from BIDs, which leads us to our view that the balloting question needs to be dealt with differently.

Let me tie in the question of Crossrail at this point. Like Crossrail, any other potential project that might attract a BRS will almost certainly involve other sources of funding. Local council tax payers, through local authorities, make a contribution; national taxpayers, through central Government, make a contribution; and they are likely to do so precisely because of those wider benefits that such a project could bring across a wider area.

Let me say what for me is the principal question. Where other sources of funding are part of the package for a big project bringing wider benefits, and where there is a will to see investment from other sources so that such projects bring those wider benefits—just like Crossrail—those who argue for a ballot in all cases have to explain whether it is right that businesses should, in all those cases, have a vote and a veto on whether the project goes ahead? In other words, should business be able to block projects even if the will, the desire and the approval is there from people who are not in business but who have an interest in the benefits that a project could bring to an area? Is it right that businesses should have that vote and veto when they may be paying a quarter or a tenth of the project funding, or when a BRS may contribute a negligible proportion of it? That is the question at the heart of whether a ballot is right in all circumstances, and that is why we have taken the view that it is not right to give businesses a vote and a veto in all circumstances, whatever the proportion of funding for a project they would contribute, but that it is right to put a ballot in place where business is required to pay more—more than a third—of the project costs.

I now turn to the question of Crossrail. Is it unique and should it therefore warrant unique treatment in the Bill? In my view, Crossrail is a very special project but it is not unique. It is special in its scale. For the purposes of the BRS, it is also well developed: its business plan, project plan and funding package are clear. To that extent, it is well ahead of the field in relation to the potential use of the BRS. However, I think it is easy for Members of all parties here to consider that other major transport projects similar to Crossrail may be highly desirable, play a big part in economic development and bring benefits to other areas of the country—projects for which the BRS could play  a part in the funding package. They may bring a similar relative investment and have similar relative economic importance as Crossrail.

The hon. Member for North Cornwall has argued that Crossrail is special because it has been subject to legislation. Some transport projects in the future, for which the BRS may be appropriate, may also require legislation. If they do, why rule them out of benefiting from a BRS, using that argument to justify a carve-out for Crossrail? The point is that, when Parliament has considered a project and given it the go-ahead—Crossrail in this instance, but potentially other transport projects in other areas—is it right that a business vote could stop the project later? Essentially, that is the argument advanced by the hon. Member for North Cornwall. He is trying to justifying a rather odd position, which, when I gave evidence, I described—perhaps a bit harshly, but I still maintain that this is the case—as illogical and intellectually inconsistent.

Crossrail is special—it is more advanced than any other potential project—but it is not unique in terms of what we, or other areas of the country, may want to use BRS to contribute towards. For that reason, it is not correct to say that it needs a special carve-out, and that we should invent a set of principles to cushion Crossrail and give it special treatment in the Bill.

I hope that the Committee will forgive me for dwelling a rather long time on that point. I shall deal with the points that have been raised and the amendments, but I dwelt on those questions because they go to the core of the Bill, and many other points that we will come on to are in a sense derived from the decisions that the Committee and Parliament will take on them.

We will discuss the provisions for detailed consultation and explore concerns about business consultation and influence on any potential use of the BRS under clauses 5 and 6, but I can say now that levying authorities that want to use the BRS will be required to draw up a prospectus, which will be the basis for formal consultation. The prospectus will need to set out the detailed plans for expenditure, including the time scales and funding sources, in addition to how the supplement will work, the assessment of economic benefits that could be brought to the area and the costs of the project; I have published the draft guidance that will help to frame that requirement to consult. The prospectus will allow businesses to see clearly and cross-examine the costs and benefits that may be proposed. I published the draft guidance at this stage partly for formal consultation over the next 12 weeks and partly to inform the Committee’s deliberations of the relevant clauses when we get to them. In summary, we are trying to strike an appropriate balance.

Photo of Brian Binley Brian Binley Conservative, Northampton South

I am still concerned about local authorities’ ability to consult and the quality of the consultation. Will the Minister give us some reassurance that, as part of the process of ensuring that the Bill works fairly and properly, he will ensure that that quality is improved?

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

I am grateful to the hon. Gentleman for his intervention. Indeed, part of my purpose in producing the draft guidance covering consultation is precisely to collect views, particularly from people such as himself who may be concerned about the nature of the consultation process over the next 12 weeks, on whether that could be strengthened, and if so, how. If the hon. Gentleman wants to submit a view to me, I would be pleased to receive it.

In summary, we are trying to strike a balance between giving business a degree of reassurance to which we believe it is entitled, and the interests of others, including local residents, who may benefit from or share an interest with business in a project supported by a BRS going ahead, and who may contribute a share of such a project’s funding. On the question of balloting, those others may therefore say that it is appropriate to give business a vote or a veto if a BRS is to contribute a third or more towards a project’s costs, but not if it makes a smaller contribution and the financial heavy lifting comes from other sources. Business should not be able to block a project’s going ahead on that basis.

I hope that, in the light of the explanations that I have given during our debate, amendment 1 will be withdrawn and the hon. Members for North Cornwall and for Bromley and Chislehurst will not press their other amendments, but will accept that we have striven to strike an appropriate balance in the Bill.

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

I wonder whether I might seek your guidance, Mr. Atkinson, before I remark on the Minister’s point about pressing amendments to a vote. Would it be possible to vote on amendments 1, 5 to 7, 10 and 12 all together? I do not intend to press them to a vote now, but would it be possible to vote on them en bloc, or would there have to be a separate vote on each?

Photo of Peter Atkinson Peter Atkinson Conservative, Hexham

No, we cannot do that. We would only vote on amendment 1 at this stage. If hon. Members want to vote on the subsequent amendments, which have been grouped with amendment 1 for the convenience of debate, they will have to be voted on in their proper place in the Bill later.

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

Thank you, Mr. Atkinson. I will signify my intention to press for a vote when we reach the appropriate point. The reason I mention that is that, as the Minister has quite rightly pointed out, amendment 1 relates to the theme under discussion, namely consultation with business and being able to demonstrate that business supports the scheme, but the crucial issue is the ballot, which, as I understand it, is dealt with later in the Bill. We will have the opportunity to vote on, for example, amendments 5 to 7, which are on the issue of a ballot, when we reach them. That is the crucial question for hon. Members, certainly on this side of the Committee.

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

Along similar lines to the hon. Gentleman, I point out that amendment 25, which is the principal amendment in my name—the others are essentially consequential—is grouped here for the purpose of debate, but it is actually an amendment to clause 4, and I  therefore wish to put the Committee on notice that when we reach it, in due course, I anticipate dividing the Committee.

Photo of Peter Atkinson Peter Atkinson Conservative, Hexham

I am getting some helpful guidance. If hon. Members indicate that they wish to vote on amendment 25 when that comes, they will not be able to vote on amendment 5, as the one cancels out the other. So voting will be restricted to amendment 25 or amendment 5, but not both.

Photo of Peter Atkinson Peter Atkinson Conservative, Hexham

Yes. I am sorry to have interrupted, Mr. Rogerson.

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

I do appreciate that I threw the debate slightly off course with my question, Mr. Atkinson.

This has been a useful debate on what is the most important issue for many of the witnesses we heard from in our previous sessions. I will focus, first of all, on the points made by the Minister in response to the individual amendments.

Amendment 1 would set out a clear indication that the business community’s views matter, and that for a project to proceed it must be clear that the business community is convinced that the economic development case has been made. Although I accept the Minister’s claim that the only way to do that would be to have a ballot, I would have thought that it might be possible to set out clearly in that ballot that the business community supports the measures in light of the intention to promote the economic development of the area.

The Minister made a number of further points about balloting, and therefore amendments 5 to 7 and 10 to 12, as well as amendment 25, to which the hon. Member for Bromley and Chislehurst has just referred. Why should we not have a ballot for Crossrail? The hon. Member for Cities of London and Westminster made a very good point when he said that if Crossrail were a new project being proposed subsequent to the Bill being considered, of course we would be calling for a ballot. However, Crossrail is different; in the view of many, it is unique. In the Minister’s view, it is not unique; it is very much the same as any other project which might emerge, but I think the time scale makes it very different. Most of the witnesses that we heard from were clear in pointing out that they felt it to be unique as well. I think that most politicians in London would say that Crossrail is a project of unique significance, having had vast amounts of consultation and scrutiny. I therefore believe that it is of a different magnitude, or at least that we have arrived at a formulation different from that for any subsequent scheme elsewhere in the country.

The Minister said that he was sympathetic. I am very grateful for his sympathy and he did look as though he was wrestling with himself and was quite anguished as he tried to reconcile all these important arguments. It might help to point out that, unlike the Conservative party—we will no doubt develop this argument when we debate later clauses—my party does not believe that this measure should be restricted to London. We believe  that it is a useful tool, and we heard from the Local Government Association that many projects may now emerge that require a BRS. We do not have a problem with that as a concept. The problem is that there needs to be a ballot. That is our opinion and that of many organisations representing the business community.

The distinction between not having a ballot on Crossrail specifically and not having a ballot in London at all is crucial. The Minister said that 25 years may be the lifetime of this legislation and by then it may well have effectively run its course. A few years ago, it was my privilege to serve on the Committee considering the Bill that became the Commons Act 2006, where we were looking at legislation that dated from the 12th and 13th centuries. It is important that we consider the possibility that future projects in London will be funded under any regulations that we play our part in approving. Most people accept that there is a difference between Crossrail and other projects that may emerge elsewhere in the country.

The Minister returned to a point that he made in his evidence to the Committee— that a ballot will effectively give business a veto over those projects. I think that he is saying that if a third or more of the cost of a project is funded by the BRS, he is quite happy for the business community to have a veto, but if it is slightly less—1 per cent. less for example—he is not happy for it to have a veto. I do not believe that it is a veto, but he has presented it to the Committee in those terms. Government Members who say that there is an intellectual inconsistency ought to consider their own arguments about this concept—or spectre—of a veto quite closely, because surely they apply equally whether the contribution is more than a third or less.

The lower the proportion of the overall financial package provided by a BRS, the less important it is to that project’s advancement. Far from being a veto, the ballot is merely a way for the business community to say to all the other funding partners that it is not convinced that it will reap equal benefit from the economic development in question, so they should go back and look at it again. That important point needs to be borne in mind. Through the consultation, local elections and the mechanisms for contributions that may be made by central Government to a project that is proposed by an elected government body, there is in many cases accountability to these other sections—a veto, if one likes, on behalf of the other funding partners. To pick out the business community and say that it will be handled differently is inconsistent and unfortunate. Regardless of whether the BRS will form more or less than a third of the funding package, the point is that it is still 2p on the rate to a business in an area where a BRS is imposed. It will be of no comfort to the business that the overall contribution is less than a third, because it is still paying its 2p, without the benefit of a vote. The fundamental problem with the Government’s argument is that businesses in an area where a greater contribution is to be made are to be allowed to have their say, even though their own contribution will be no different from that of businesses in an area where the contribution makes up less than a third of the funding package.

There are problems and intellectual inconsistencies in the Government’s argument. I therefore very much wish to press the amendment to a vote, so that we can have the Committee’s decision on that important question. I  would also like the opportunity later of a vote on whether a ballot is crucial to the proposal. I believe that it is, and I therefore signal my intention to press to a vote my amendments on the ballot proposal.

Question put, That the amendment be made.

The Committee divided: Ayes 6, Noes 8.

Division number 1 Nimrod Review — Statement — Clause 1

Aye: 6 MPs

No: 8 MPs

Ayes: A-Z by last name

Nos: A-Z by last name

Question accordingly negatived.

Clause 1 ordered to stand part of the Bill.