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Business Improvement District (Coventry)

Volume 475: debated on Tuesday 13 May 2008

I should like to thank you, Mr. Cummings, and through you, Mr. Speaker, of course, for granting this Adjournment debate on the business improvement district programme under way in Coventry. It is a very important topic to big and small companies in Coventry—particularly to the medium to small ones.

The matter was brought to my attention at a meeting in early March by three small companies operating in the Coventry business park. I was then contacted by the university of Warwick and a company on the Warwick science park, representing many more companies, which brought to my attention similar dissatisfaction. I have been very active locally in expressing their disquiet about the expense that the process has involved them in, and I have let it be known that I intend to probe the Department for Communities and Local Government on the matter—I thank the Minister for attending this debate on behalf of the Department. We have tried to take the matter further and to get answers to a number of questions.

To my knowledge, neither in my office in Coventry, nor down here, have we been contacted by a single company in the whole of Coventry in support of the BID. In their five-year plan, the BID promoters laud themselves for their Herculean efforts to contact everybody who needed to be contacted. It struck me as strange, therefore, that three quite important companies—they might be small, but in the context of a small business park, two of them are certainly quite large—had no knowledge of being contacted, in writing or in person, by the BID company.

Out of interest, I checked at the reception of Eu-Matic—one of those companies—and asked whether anyone remembered seeing a letter to that effect, and was told that they did not. Neither the managing director, the general manager nor the finance officer had any recollection of it. The first that they knew of the matter was when a bill came through the door for £16,000—if you please—which is an awful lot of money. It represents an additional 1.5 per cent. supplementary business rate for a small company that exports about 60 or 70 per cent. of its products, which are, believe it or not, components for the automotive industry.

In this day and age, that is an achievement, given that the UK has become less and less a centre for the manufacture of component parts—we still do quite a lot of assembly—which are increasingly manufactured outside the UK. That company has survived through making huge investment in very good product development and manufacturing technologies, and it has remained competitive when the world is going global and when such metal-based door components are increasingly sourced out to the low-cost economies. Those at that company said that they knew nothing about the new rates; as far as they were concerned, they had not been contacted by the BID promoters. As Members can imagine, therefore, it was a bitter blow to learn about the £16,000 supplementary rates bill from the BID promoters, the idea of which is to ensure that Coventry continues to be seen as the best place from which to do business.

I told the chief executive of the BID company that the best thing to do to ensure that Coventry is seen as a good place to do business from is to reduce the business rate, which would be welcomed all round. People would flock to Coventry if the rate was significantly reduced; otherwise, it will become increasingly difficult to sell. However, the BID company claims to have contacted everybody. On 18 March, the chief executive, Mr. Stephen Welch, assured me not only that the three companies with which I had the first meeting—Eu-Matic, McBride and Palmer and Harvey—were contacted in writing, but that they all received an individual visit. That is consonant with the sort of claims that it makes in its five-year plan about the depth and breadth of the consultation.

The companies, however, have no record of such contact—certainly, the managing directors and finance directors of each of the three companies could find no trace of it. I replied to Mr. Welch, “You must have an audit trail. A note must be made of every visit, and it must be dated. You must know who went, whom they saw and for how long.” That was some two months ago, but I still have not received anything from him. One begins to wonder, “Where is this paper trail? Where is this evidence? Are they quite sure that they did carry out this consultation to the extent that they claim?”

I turn my attention to another company that came to see me in the second wave. It is based on Warwick science park, which works very closely with the university. Dr. Colin Fink is medical director of the company, which deals with diagnostic medical equipment of the highest technical quality. His calculation of the participation in the vote—I shall leave a copy of this quote with the Minister for him to consider—is that

“2,520 ballot papers were issued. 7 per cent. (177) were returned by the Post Office. So 2,343 were believed delivered and 49 were re-issued. So 2,392 papers were apparently issued. The Council records 833 were returned as 33 per cent. return. (Why such a poor return I wonder?) In fact of the total business properties”—

in Coventry—

“that is 10.85 of the total. The Council reports 54 per cent. were ‘in favour’. I estimate that to be 450 ‘in favour’ results. 450/7693 = 5.8 per cent. of the total business properties. The maximum mandate therefore…was 5.8 per cent. of businesses in Coventry.”

Even if we calculate that percentage using the restricted level of properties that the BID company, rightly or wrongly, wants to use, it still comes out at only 18 per cent. in favour.

I put it to every Member of Parliament, the Minister, the Department, the BID company and the council that 18 per cent. is no basis on which to proceed with a 1.5 per cent. increase in business rate. One could argue that that is where the BID has set the bar. However, if it wants to push through a 1.5 per cent. increase, the bar for participation must be set a lot higher than 18 per cent. of the businesses eligible to vote.

Other companies that I have met and those speaking alongside the university—they are very much on the ball—make no bones about it: they were contacted and told all about it, and they voted against it. The whole of the university voted against it. Everyone on the science park voted against it. Indeed, not only did they vote against it, but they cannot accept the so-called improvements or additional services being offered by the BID company, because standards have been lowered so much that they would not be allowed to continue to train.

The medical equipment company is being told that it cannot have its full-time receptionist. It has to have a van going around every so often, but it does not know how often. It has to have a single camera replacing its fully fledged, proven, tested and accepted system of individual reception for every item that comes in. Given the business of the company concerned, one imagines that such items would include viruses and other pathological goods.

Those people have contacted me. No one has come forward to support the BID. The whole process leaves a great deal to be desired. One cannot set a bar so low that 5.8 per cent. or even 18 per cent. of those voting, not those eligible to vote, is acceptable. People should not claim that they have carried out an effective and extensive survey or consultation—all those words are in the five-year plan—if only 5.8 per cent., or even 18 per cent, vote in favour, and that is after putting through a real selling document. The process has not been conducted on the basis of what people would like, although the BID company pretends that it has. However, anyone who reads the five-year plan can see that it is a document of pretty slick salesmanship—to put it quite bluntly. I wish in no sense to impugn the integrity of any member of the BID team, the council or any of the organisations involved. However, this is not a consultative document. It is a business plan proposed, as the BID team says, on the basis of deep, intensive consultation with the companies concerned. There is no need for me to belabour the point; we know that participation was minimal and that only a minimum of the majority voted in favour of it.

Anyone who reads the document will find that its advertising is subliminal. It suggests that everyone is madly in favour of the plan. The document claims that circulars and junk mail communications were not used to let people know about the ballot. However, when I tried to find out what was used for the ballot, I found a four-sided document with the details of the ballot tucked away on page three of four. It was written in small print and took up only a quarter of the page, and that is all there was about the ballot.

A proper timetable was laid out. I have the document here. It says, “BID ballot” on about a third of the page. It then says:

“We’re supporting Coventry Best For Business…are you?”

On the front page, it says that Jaguar is all up for it. It has the feel of a selling document. I do not want this to be taken further than this Chamber, but it reminded me of the mis-selling of pensions, which had to be cleared up in 1997 by one of our former colleagues, Helen Liddell, who is now high commissioner to Australia. The same sort of technique was used. People were trying to sell something for much more than it was really worth. All that customers were really being sold was puff and smoke.

My hon. Friend and I often collaborate on a number of issues that affect people in Coventry. One of the things that worries me is the fact that we are trying to reduce the amount of so-called red tape on small businesses. About 20 years ago, when we had the big recession in Coventry, there were lots of efforts to establish the business parks, which is the background to our concerns. This plan may have good intentions, but it could quite easily deter investment from coming into Coventry given the present economic climate. Those matters should be considered when we look at the levies mentioned. I can remember the justification for stopping local authorities levelling a business rate. The argument was that the rate was about 3 per cent. of the overheads. In fact, it was about 1.5 per cent, and here is an increase of 1.5 per cent. Therefore, without impinging on the integrity of the company, the plan alarms me. Given the economic situation, the matter must be taken very seriously.

As my hon. Friend has said, we have worked closely on many such issues, and I am very pleased that he has come today and contributed to the debate. Some of the companies are in my hon. Friend’s constituency. This is not a constituency issue; it is a Coventry-wide issue, and he has lent his full support to it. A 1.5 per cent. increase on the business rate is huge, especially as everything else is going up. What a time to do it!

Time is marching on, and I must give the Minister some time to reply. I think that the real reason for the increase is that the city and its organisations, such as the chambers of commerce and CV One, are losing Business Link funding. They are losing funding from the European regional development fund and from a number of other sources. They want to keep themselves going. The chamber of commerce may even be losing the support of its members and needs new funds. The city and its organisations are trying to get a 1.5 per cent. increase in the business rate—I cannot believe that they think that they can get that through—to make good all the things that they are losing. They then ask, “What sort of basis shall we sell it on? What sort of positive benefit shall we offer to these people?” They then come up with two ideas. One is security, and we have seen what that means for one firm—the company on Warwick business park. If it adopts that security, it goes out of business. We know what it means for the others as well. They have perfectly good security already. One of them is part of the Canadian group, Eu-Matic. They will not get investment. Some £16,000 has gone out of their income at the drop of a hat. So the measure will have the opposite effect to the one desired. That is why we are bound to question it.

Therefore, I do not think that the process has been successful. The representations made in the document about what the BID company is going to do need to be considered from a legal point of view. I am not sure that it is not on the very verge of illegality in a number of respects. Have the Department or the BID company taken legal advice? There are several respects in which I think that the company needs to take legal advice, one of which is in respect of UK law—it is probably all right there. I am no lawyer, but I have some experience of the implication of legality in taxation matters. However, I am not so sure about EU law. Imposing a tax on one group of companies but not on another could be open to challenge. Have we had legal advice on that? If we have, I would be very interested to see it. What about the European Court of Human Rights? Are we sure that there is not too great an imposition on one company as opposed to another? That is a separate point. I think that the whole process could be susceptible to challenges on both those fronts. I should like to know that the proposal has been considered and is watertight in both those regards.

My third point relates to the representations. Are we sure that they are capable of being fulfilled, that they have not been oversold and that we are not committed to doing things that we are not able to deliver? Are we sure that the legality in those three respects is in good order? It is mentioned that reductions can be negotiated with the landlords of existing estates. Have we negotiated those reductions and will they be of the order claimed in the document, which is 40 to 60 per cent.? Has that been done?

The BID has been up and running for 10 months now. Outside the city centre, which I understand is covered by CV One, why is it that sports, recreation and leisure facilities are excluded? A lot of the promotional money is directed precisely to their benefit. For example, it is directed at hotels and sports facilities. People coming into the town from outside benefit from everything that is being done there. Despite that, we are making another class of company pay for it. That class is defined very carefully in the document.

I do not wish to take up all the time, and I am conscious that my hon. Friend the Minister will not be able to answer all the points that I have raised today. I will let him have a series of question that I would like answered. He will no doubt tell me that we are launched on the BID now and that it will take at least three years. If Advantage West Midlands does not come in with its money, it will take at least five years. He might say that it is too late to do anything about it now and let us see how we go. My reply to that would be simply that we should not go headlong into it. We should re-test it seriously. It is in the open now, and companies know about it and have received their first bills. We know how it is with a tax reduction—we do not notice it until it arrives on the doorstep. It is the same with a tax increase. People did not realise about the 10p tax increase that was announced a year ago until it landed on their doorstep, although some of us tried to mention it. So it is in this case.

Small companies are competing and do not have time to study the matter. Universities are used to dealing with forms, and I can see why they cottoned on much earlier. The matter is out in the open now, and we should test the water in a non-binding way. We should reissue the offer and say, “This is what is now being offered to you. Do you still wish to continue with the BID?” Let us see what response we get. If we get a favourable response, I shall withdraw and say, “Well, despite all my worst misgivings and the representations made to me by these few companies, of course I will let it go ahead.”

However, if we were to get an overwhelming majority, with a high turnout this time, saying, “No, we really didn’t realise what it was, and we don’t want it,” perhaps we could find something else to do with the money. It is pointless to have money going in that nobody gets any benefit from except the people who are not paying anything towards the BID, such as Coventry chamber of commerce, who are getting back Business Link money, and some of the hotels.

We need to call a halt to further commitments, and it will take a matter of three months to test the water and say, “This is what it’s really about. This is how much you’ve got to pay, and this is what you’re going to get. Do you wish to proceed, or are there alternative ways in which we could proceed?” That does not mean undoing everything, but it would mean people being much happier about a situation that they are currently deeply dissatisfied with.

It is a pleasure to work under your stewardship, Mr. Cummings.

I congratulate my hon. Friend the Member for Coventry, North-West (Mr. Robinson) on securing the debate. He will know even better than me, from his days as a Minister, the power of such debates and the power of Westminster Hall and the spoken and written word here. I am sure that that will echo in Coventry this evening. I also congratulate my hon. Friend the Member for Coventry, South (Mr. Cunningham). Hearing one colleague espouse an issue often makes it a matter for concern, but when a couple of them make their constituents’ case together, that amplifies its importance to local people.

My hon. Friend the Member for Coventry, North-West, said that he knew of no companies that supported the business improvement district programme. I have been talking to my officials about the issue, and they tell me that 54 per cent. of businesses that voted were in favour of the BID, although my hon. Friend made some interesting remarks about the number that voted.

My hon. Friend made an interesting point about turnout. As I am sure he is aware, a vote requires not only an overall majority but an overall majority of the rateable value of companies voting. He mentioned the turnouts for the votes on the BIDs in Coventry—38 36 and 33 per cent. He is right that we need to get better turnouts. Having said that, many wards in local elections in my constituency had lower turnouts than that, with more than two options to choose from. The system that we use for elected representation means that even a lower proportion of people voting can result in people being elected and decisions being made. That is not unusual to us in this country, but my hon. Friend made a pertinent point about the need to have a high turnout in ballots. I agree wholeheartedly that the higher the turnout, the better.

My hon. Friend asked about legal advice, and I undertake to write to him to give more clarity on that. He also mentioned the European Court of Human Rights. From my experience, legislation is ECHR-proofed before it goes through the House. Again, I shall write to him to provide more clarity.

I can understand why my hon. Friend has an interest in this area of policy, as there are two BIDs in Coventry, one in the town centre and one covering the whole of Coventry, as he mentioned. I know that he supports BIDs as a policy, even though he has anxieties about one of the Coventry ones. There are about 71 of them now, and that is the only one that has caused such local difficulties.

I hasten to say that I am raising no doubts about any of the other BIDs that are proceeding. My call for a halt and review at this stage relates only to Coventry.

Absolutely. I appreciate that, and I thank my hon. Friend for supporting this important change, which has allowed local authorities and BID companies to raise money for good causes in their localities. The purpose of BIDs is to encourage local authorities and businesses to work together for the benefit of their local communities. I can think of examples, although I do not have a BID in my own community. The Peel centre in Gloucester is popular with shoppers, but we have had huge problems with car crime in the area. People have parked their cars, gone to the cinema and been burgled. Perhaps a BID would be the answer for my local council and local companies to raise money for CCTV cameras. Such innovative approaches have borne fruit and been successful across the country.

Improvements to an area via a BID are funded by a levy on non-domestic ratepayers or on a defined class of ratepayers in the area covered. The levy varies by district, as legislation does not prescribe how it should be set or its amount. As my hon. Friend said, in this case it is 1.5 per cent. of the rateable value of a property, plus £200.

There has been widespread interest in and enthusiasm for BIDs and the opportunities that they can offer. As I have said, there are about 71 BIDs, with very successful ones in places such as Kingston, Blackburn and Derby, but there is no template setting out what a BID should or should not include.

The process of implementing a BID, which is the key to the questions that both my hon. Friends asked, is entirely a local initiative. Although the Government have set out the legal framework for the process, we do not take a role in identifying the purpose of initiating a local BID. It is for local businesses and local authorities to work together to determine the requirements of their area and develop a project. However, a number of safeguards are set out in BID legislation to protect ratepayers who are potentially affected and ensure that all ratepayers can have their say.

My hon. Friend the Member for Coventry, North-West, made an interesting point about ballot papers being tucked away on page 3 of a document, and my view is that such things need to be prominent. We need to encourage turnout. We want people to be a part of BIDs and to support them, but that has to happen from a position of knowledge. I take on board my hon. Friend’s concerns about the BID in Coventry, but as I have said, 54 per cent. of businesses that returned the paperwork said that they were in favour of it. I will be happy to discuss that with him elsewhere.

The legislation governing BIDs ensures that before any proposal goes ahead, the businesses concerned must have the opportunity to vote. In identifying who will be liable for the additional levy, and therefore who will be entitled to vote, those developing BID proposals are entitled to ask the local authority to provide the names and addresses of non-domestic ratepayers from its local rating list, and the rateable values of the businesses in the area to be covered by the proposed BIDs.

It is up to businesses themselves to be satisfied that they have arrangements in place to ensure that a BID ballot paper reaches the person who will sign it on behalf of their business—

It being Two o’clock, the motion for the Adjournment of the sitting lapsed, without Question put.