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Clause 3

Business Rate Supplements Bill – in a Public Bill Committee at 12:15 pm on 27th January 2009.

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Use of money raised by a BRS

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

I beg to move amendment 46, in clause 3, page 2, line 10, at end insert ‘, and

(c) which promotes the economic well-being of its area, including the provision of transport infrastructure and the promotion of employment and employment skills, investment, regeneration, business efficiency and competitiveness.’.

Photo of Peter Atkinson Peter Atkinson Conservative, Hexham

With this it will be convenient to discuss amendment 2, in clause 3, page 2, line 18, at beginning insert ‘primary and secondary’.

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

We now turn to definitions of the use of money raised by BRS. I tabled the amendment in a spirit of genuine enquiry and helpfulness.

One concern raised in the evidence sessions by a number of witnesses from the business community was the definition of economic development. It links to the concerns that are rightly set out in the consultation document that the Minister has provided about how the business community can be reassured that there is genuine additionality in the funding and, if business is to contribute, how it can be assured that the money is genuinely channelled towards economic benefits, rather than substituted for funding for other activities.

The clause starts by referring to

“expenditure...on the project to which the BRS relates”, but subsection (3) defines what the money can be used for almost by exclusion. It says what BRS money cannot be spent on, but you will remember, Mr. Atkinson, that in the evidence sessions many business organisations said that they would like the Bill to contain a more comprehensive definition of what it could be spent on by way of economic development. The amendment endeavours to achieve that.

If the amendment were made, as well as saying that the BRS money may be spent only on the project to which the BRS relates and that the authority would otherwise not have incurred that expenditure—it is genuinely additional—the clause would state that the BRS money may be spent only in a way that promotes the economic well-being of the local authority’s area. We set out specific examples of such expenditure, which I suspect have been well rehearsed, both in the documentary  evidence—the White Paper—and our evidence sessions. I do not think that anyone would argue against such areas of expenditure attracting the interest of authorities for a BRS scheme, but the amendment is intended to reassure businesses that there is a requirement to stick to a definition that is in the Bill, and that should for any reason there be a straying beyond that, they would have recourse through the usual provisions—judicial review and so on.

I am sure that local authorities would not stray, but the amendment is intended to help and to make the spirit of co-operation more effective, which I am sure is something that, after the controversy of the earlier debates, we all genuinely wish to see, having got thus far. That is the spirit in which I move the amendment, and I am interested to hear what the Minister says about how we can achieve that better definition, which seemed to be a genuine—not an obstructive—desire on the part of business.

Photo of Nick Raynsford Nick Raynsford Labour, Greenwich and Woolwich

I shall not detain the Committee long, but I cannot fail to observe the extraordinary contortions and intellectual confusion displayed by the Opposition. We have just heard them arguing that the Bill should be limited to London and the Crossrail scheme; however, the amendment, which was obviously tabled at the same time as the others, is based on a widening of the remit to include provision for training, employment and other desirable objectives, which the hon. Member for Bromley and Chislehurst knows perfectly well could not be contemplated for at least 25 years because the proceeds of the business rate supplement have been predicated in London for the support of Crossrail throughout that period.

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

The right hon. Gentleman is always courteous, but I am sure that he will appreciate—he has been here long enough—that it is not beyond the wit of anyone to have worked out that had we by some chance and some fluke of arithmetic in the Committee succeeded in limiting the Bill to Crossrail, I might not have moved the amendment. I would have thought that that was obvious.

Photo of Nick Raynsford Nick Raynsford Labour, Greenwich and Woolwich

So here we have the Opposition, who have said emphatically that they do not want anywhere else in the country to get the benefit of the provision, saying that although they would like to see the remit expanded to include certain activities such as training and skills development, those things would not be available anywhere else in the country. They would only be available in London where they could not work because the proceeds of the business rate supplement have been predicated for at least 25 years on Crossrail. That is a product of a party the whole approach of which on this subject of relations between business and industry and the promotion of economic development shows no sign whatsoever of an ability to learn any lessons.

The Conservative party wrong-footed itself five years ago when it opposed BIDs. It did not understand the importance of the scheme, to which it is now, at a late date, a convert. It recognises that it made a mistake, but it cannot learn a lesson and it is about to commit the same mistake again. I forecast that in a few years’ time we will hear the Conservatives talking about how excellent  it is to have a framework in which business and the local authority can work together for economy development—business rate supplements. I look forward to that day when wisdom prevails, but in the meantime I am appalled at the Opposition’s incoherence.

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

Although I share the concerns of the hon. Member for Bromley and Chislehurst and his hon. Friends about some aspects of the Bill, I agree with the right hon. Member for Greenwich and Woolwich on this issue. As we saw in the last vote, there is a clear difference between the parties’ views on whether the provisions should be available—subject to a ballot, which we have already discussed—outside London. My party believes that the provisions should be available in other parts of the country, as long as there is a clear coming together of the business community, local government and all the other funders to deliver.

I shall speak to the amendments that stand in my name and that of my hon. Friend the Member for Solihull to highlight the thinking behind them. They are probing amendments, to which I hope the Minister will have the opportunity to respond briefly. Amendment 2 deals with education. We question whether there might be provision for training and skills to be involved in a scheme is funded by a BRS, as opposed to specific primary and secondary education, which is funded as a core function of the relevant authority. The purpose of the amendment is to probe the Government and see whether their intention is to allow local authorities, as part of their economic development schemes, to fund in that way the provision of training and skills.

Photo of Brian Binley Brian Binley Conservative, Northampton South

I was rather taken aback by the remarks of the right hon. Member for Greenwich and Woolwich. It seems to me that there was a sizeable degree of illogical thinking in those remarks. He is the man who presented the BIDs concept to this House and who said that it was vital for business to be as involved as it possibly could be in all the activities relating to the project. He is clearly aware of the need to encourage businesses to be involved, and, I have no doubt, the great scepticism that businesses, particularly small and medium-sized businesses, feel about expenditure that is said to be to their great benefit. They hear those words and become frightened, because all too often in the past they have been told that a particular project or fundraising exercise will be to their benefit, but have found that they are the payers, to very little benefit indeed.

I would have thought that the right hon. Gentleman, who produced the BIDs scheme so well, would have supported the argument that to create confidence within the business community, we need to define the role that a business rate supplement can play and the projects it can be involved with as precisely as we are able. The more open the definition, the more room there is for suspicion in the business community, particularly in small and medium-sized businesses. It is that sector that will be particularly hurt if the burden of a large project lasting 10 or 15 years is placed on it to extract the BRS. I would have thought that he would be pleading with the Minister to expand the definition, on the basis that that would give greater confidence to the business sector.

The business sector made it clear to us that it is immensely concerned about the loopholes in the Bill, which it thinks is loosely written. It is concerned about  giving local authorities the right to extract what it sees as greater dues from them. To define that in more sensible terms would be helpful. I urge the Minister to take that plea seriously. If he is unable to tell us today what he might do, he should come back with a better definition, even though he might reject the amendment.

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

I am grateful for this short debate. We are dealing with an important part of the Bill, which is drafted to give the sort of assurance that the hon. Member for Northampton, South seeks and, to some extent, the clarification that the hon. Member for North Cornwall is looking for. I suspect that there is no great difference in our general approach to the provisions and to what is right in principle. I accept the intention of the hon. Member for Bromley and Chislehurst in moving the amendment. He is concerned about substitution, as indeed is the hon. Member for Northampton, South.

I shall deal first with amendment 2; in a sense, it touches on the same concern—the risk of substitution. In other words, BRS might be used to fund services for which local authorities should already be providing funding. Were the hon. Gentleman inclined to press the amendment to a Division, I should make it clear that it seems to weaken the safeguards because it narrows the definition set out in clause 3(3)(c) to primary and secondary education rather than broader education services. The effect would be that the business rate supplement would be restricted to primary and secondary schooling.

If hon. Members consider the guidance that was published on Friday, they will realise that local authorities could not propose using BRS revenue to fund housing, social services, education services in general, services for children, health services or planning services. We made that provision for a reason. The Bill is designed to give the reassurance that local authorities cannot use BRS as a supplement to fund services that it has a statutory obligation to provide.

On the question of training and skills, if a proposition was part of a prospectus that demonstrated an investment in training and skills and in promoting the economic development of an area, it could be acceptable for BRS to be an element of such funding. If the hon. Member for North Cornwall was using amendment 2 to seek such an indication, he now has it and will not need to press it to a Division.

Amendment 46 proposes that BRS revenue could be used only to fund expenditure that promotes the “economic well-being” of an area, including

“the provision of transport infrastructure and the promotion of employment and employment skills, investment, regeneration, business efficiency and competitiveness.”

I understand why the hon. Member for Bromley and Chislehurst might want to probe, but the amendment would unnecessarily limit the potential use of BRS.

The Bill already contains clear and appropriate limitations. Clause 1 makes it clear that BRS revenue can be spent only on projects that, the authority has established, contribute to and promote the economic development of an area. As I said, clause 3 prevents sums raised by BRS from contributing to the provision of services that a local authority has a statutory obligation to provide.

The third limitation—or lock, if the Committee wills—is that the Bill makes it clear that BRS funds cannot be used for expenditure that the authority would have incurred if it had not established a BRS. Although limits are appropriate—we have set them out in various parts of the Bill—we do not want to be too prescriptive or restrictive on whether a local authority could use BRS revenues. Provided that the link to economic development can be properly established, it is right that local authorities should have the freedom to propose the type of project for which they wish to use BRS funding.

I hope the Committee will accept that general approach. If members have detailed views on how to frame guidance, I would encourage them to submit those views to the consultation that I launched on Friday.

Photo of Bob Neill Bob Neill Shadow Minister (Communities and Local Government), Deputy Chair, Conservative Party 12:30 pm, 27th January 2009

I am grateful to the Minister for that response. I hope that he will undertake that the Department will be equally open-minded in its discussion with business over the guidance. If that is a means whereby this can be achieved, then so be it; I am more interested in the objective than the means.

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

May I say clearly to the hon. Gentleman and to the Committee that I would welcome it if business organisations that wish to contribute views—either formally, in writing to the consultation, or during the consultation period—were to approach us. I encourage my officials to hold such discussions with business organisations where they have views to contribute on this question.

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

I am grateful to the Minister for his helpful response. Against that background, having probed the issue and had a useful debate, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

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

I beg to move amendment 3, in clause 3, page 2, line 26, leave out ‘The Greater London Authority’ and insert ‘A levying authority’.

Photo of Peter Atkinson Peter Atkinson Conservative, Hexham

With this it will be convenient to discuss amendment 4, in clause 3, page 2, line 27, leave out ‘the Greater London Authority’ and insert ‘a levying authority’.

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

I apologise for the unseemly haste with which I was seeking to debate this issue under the previous group. These amendments look further at what may or may not be done with the money and how it may be used by the organisations that might be involved in spending it. They are probing amendments and are intended to help us understand the Government’s point of view.

As I understand it, provisions under clause 3 allow the GLA, as a levying authority, to permit other bodies to spend some of that money in pursuance of a project, but not in other cases. The Minister referred to passenger transport authorities in other parts of the country, which are not directly elected and therefore are not intended to be levying authorities. However, they may well be involved in the spending of moneys, or the delivery of a scheme. We are seeking to understand how they might be involved, and whether there are provisions  in the Bill to allow for that money to be moved. I am sure that the Minister will correct me if I am wrong, but I am assuming that the current provisions are there to allow the GLA, for example, to work with particular boroughs if they are incurring some of the costs of part of the delivery of a project, so that the money could be reimbursed to them. If that is the case, we are trying to find out whether there needs to be flexibility in other parts of the country for other relevant authorities to spend some of that money.

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

I have heard what the hon. Gentleman said, but I am not entirely sure what he is driving at. The Minister may be able to help me, but my understanding is that the references to the GLA in this context arise because of the particular nature of the relationship between the GLA and its functional bodies, Transport for London being the most obvious one in this area. However, it is unique and does not relate to any situation elsewhere in the country. Perhaps that is the answer to the hon. Gentleman’s situation, to some degree.

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

I am grateful to the hon. Member for Bromley and Chislehurst for trying to assist me. However, despite the amendments and the remarks by the hon. Member for North Cornwall, neither of which are clear, I am not sure what he is seeking an answer to. I would welcome an intervention to clarify that; otherwise, I shall consult the record and try to sort it out.

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

As a London MP, the hon. Member for Bromley and Chislehurst has clarified some of the issues in this provision. I was merely seeking to find out whether the Minister felt that there might be circumstances in other parts of the country where a BRS might be in operation, where similar arrangements would need to be in place to allow money to be moved between organisations. I sense that the Minister is about to find some inspiration on this and I am sure he will reassure me that these amendments will not be necessary.

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

I think that my mind is becoming a little clearer. We have framed the legislation to allow other local authorities, singularly or together if they are proposing a BRS, to enter into arrangements for part of the delivery of a particular project that may be supported by a BRS in the same way that we are making provision for the GLA and TfL, which we know will be necessary for the one clearly BRS-related project that is on the stocks—Crossrail. I am confident that we have framed the legislation to cover that possibility were it sensible or required in other areas related to a BRS, but I shall look again at our provisions if the hon. Gentleman thinks we have not.

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

I am grateful to the Minister, and to the hon. Member for Bromley and Chislehurst for clarifying the matter. Hon. Members from at least two parties are keen to see that, with certain safeguards, other areas of the country may be able to explore the option. I wanted to ensure that they have similar provisions in place, allowing them to make best use of it and allowing efficient delivery, as in the provisions set out for London in the case of Crossrail. With that reassurance,  and the Minister’s saying that he will look at the provisions again if necessary, I am happy to beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 3 ordered to stand part of the Bill.