I beg to move, That the clause be read a Second time.

With this it will be convenient to discuss the following: Amendment 1, page 13, line 6, leave out clause 19.

New schedule 1—‘Project Delivery Board—

1 A Board shall be established at the first instance of an initial prospectus being published for the imposition of an approved BRS.

2 A Board shall exisit for the period in which the BRS is in existence.

3 The members of the Board are to be appointed by the relevant levying authority in the following way—

(a) a third are to be representatives from the affected local authority;

(b) a third are to be representatives from the affected local business community;

(c) the remainder is to be made up of members appointed as thought appropriate by the relevant levying authority.

4 In appointing members to the Board the levying authority must have regard to the desirability of securing that the Board is able to perform its functions effectively and efficiently.

5 Where two or more levying authorities are acting jointly by virtue of a BRS the Board shall be established by arrangement between those levying authorities.

6 The Board’s functions are to be specified by regulations.

7 Regulations under paragraph 6 must be made by the Secretary of State within 90 days of the commencement of this Act.

8 Regulations under paragraph 6 may authorise a levying authority to use a prescribed proportion of such sums as it collects or recovers in respect of a BRS to meet expenses incurred by the Board.

9 Expenses incurred under paragraph 8 may not extend to a salary for any Board member.’.

Amendment 16, in schedule 1, page 22, line 16, at end insert—

‘11A A description of the arrangements by which persons paying the BRS shall—

(a) be kept informed of what monies have been raised in pursuance of the BRS and how they have been expended, and

(b) be represented upon the governing body of any organisation set up for the purposes of delivering the objectives of the BRS, or, if such organisation is not to be set up, how such persons are to be involved in the oversight of the delivery of such objectives.’.

As we heard in the previous debate, the Bill is attracting increasing attention from business people throughout the country whose business may be affected, should the local authority or a group of local authorities in their area choose to opt for the mechanism set out in the Bill in order to fund a local infrastructure project. Although I said on Second Reading that my party is not opposed to the principle of a business contribution to important infrastructure projects, we believe that safeguards are needed so that the businesses affected feel that they have an input, first, into the proposal being drawn up, and secondly, into whether the proposal meets with approval, as we shall discuss later.

Businesses and organisations that I have spoken to felt that the business improvement districts process was valuable because it enabled the continuing engagement of the business community in the delivery of a project, so that businesses can be reassured that the project is proceeding to schedule and in the way originally envisaged, and so that they can make a contribution to delivery through their experience in delivering similar projects in the private sector.

The new clause would set up a project delivery board as a mechanism for businesses that were making a contribution through business rate supplement, local authority representatives and others appointed to the board to enable them to come together to ensure that there was adequate oversight of the project as progressed. The positive relations that, hopefully, would have been fostered during the putting together of the prospectus would continue, increasing opportunities for joint working.

As we heard in Committee, many hon. Members consider it important to put on the record that relationships between local authorities and the business community are much better now than they have been in the past. I know that the Minister and his colleagues have used that point to argue that the ballot is not necessary in all circumstances.

The hon. Gentleman and the Minister have both said that the relationship between businesses and local authorities is profound, particularly in the case of high- profile business regeneration in our inner cities, but does the hon. Gentleman not have some concerns that the third element, the residential population, especially in our bigger cities, has often been left out? How would he try to ensure that there was input from residential communities whose vibrancy is an important part of ensuring that such initiatives are maintained, particularly in our inner-city areas, where they are most likely to take place?

The hon. Gentleman raises a good point. In his constituency there is an organisation that represents a small residential community which does not participate as strongly in elections to that body as does the business community represented in the Corporation of London, although I note from the press that that may change and that there are moves afoot for residents to mount more of a challenge at the next elections.

From my party’s perspective, the important thing is that local authorities represent the residential community. They are elected by the residential community, so it is crucial that the local authority is well represented on the board. It is the levying authority or part of the group of levying authorities and will have consulted its electorate and been elected on a platform to deliver projects such as those that may be proposed. That is a safeguard, but schedule 1 also sets out that a third of the board could be appointed by the levying authority so, for example, if the project was specifically relevant to an area where there was an active residents association, I can see no reason why someone from that association could not be co-opted to the board to represent the voice of the residents, as the hon. Gentleman suggests.

As I was saying, it is necessary to reassure the business community that its voice matters not just in putting together the proposal and signing up to it, but in the ongoing delivery of it. The board would be an additional means of fostering positive relations between local authorities and the local business community. Those relationships are undoubtedly much stronger, but the fact that all hon. Members have been lobbied by business organisations about the Bill proves that there are still issues to be overcome.

One of the matters raised time and again by businesses is, sadly, concerns about the delivery of certain local projects. The new clause would help to reassure businesses that its voice would be heard and would be central to the delivery of the BID. If the business community had any concerns about business rate supplements being levied for purposes not entirely set out in the prospectus—I am sure the Minister will tell me that that is not possible and that there are safeguards in place to protect against that—it would be reassured by having its representatives at the heart of the process.

In the debate on the programme motion, we heard from the Minister that we had excellent evidence sessions. He is right. Hon. Members in all parts of the Committee agreed that one of the most important contributions was that of Dr. Julie Grail from British BIDs. In her evidence to us at our second sitting on Tuesday 20 January she said:

“With regard to the business rate supplement, we have heard a lot today about concern with the ballot…it is not just about the ballot… it is about managing the relationship going forward. One huge value that we have seen coming out of BIDs is that it has truly brought together local government and the business community. A danger about the business rates supplement is that it could rip it apart again.”––[Official Report, Business Rate Supplements Public Bill Committee, 20 January 2009; c. 46, Q199.]

Of course, that is not the intention, but there clearly are concerns in the business community about that. We have a model in BIDs showing how positive relationships can be fostered and can deliver projects that respond to local need and ensure that everybody has a say in their ongoing management. If there was that model and it was successful for the local sorts of projects that bids deliver, we could adapt it to cover some of the bigger schemes that affect a wider area and which, it is hoped, the BRS could play a part in delivering.

According to the evidence from the head of the CBI’s property group, if the business community were not consulted about a scheme, there would be considerable business unrest. The CBI stressed that it was imperative that businesses got the opportunity to work with local authorities to deliver real economic benefit to an area. A project delivery board would be exactly such an opportunity.

As I said, the new schedule sets out in a little more detail our initial thoughts about how the project delivery board might be formed and how it might operate. One concern that I am sure we all share is that we could create a body that does the same as other bodies, and duplicates—with all the waste of officers’ and business people’s valuable time and the costs that that would involve. We have therefore, for example, said that board members should not get any form of salary. That is the tone that we are trying to set: the board would be focused on delivery and would not necessarily have to meet regularly. It would, however, be a mechanism to ensure that everybody was involved in delivering what I hope would be exciting projects that would greatly improve areas, with benefits for residents and the business community.

Amendment 1 seeks to remove clause 19, which deals with when a levying authority has not given notice to a billing authority before the start of the financial year. The issue came up briefly in Committee. There is concern that billing authorities might have to respond very quickly. That could be an extra burden on them and cause problems for businesses and local authorities as they react. The amendment is to test the Minister’s view on the issue. Surely things should be done in good time for the billing authority—in other words, by the start of the financial year so that the bills can go out together and there is no need for supplementary billing or recall of any bills. The business community would certainly welcome that. I am sure that the billing authorities, as distinct from the levying authorities, would also welcome it.

I am sure that the hon. Member for Bromley and Chislehurst (Robert Neill) will correct me if I am wrong about his amendment 16, which seeks to define and contain how money raised by the BRS is spent and to make sure that that happens according to the prospectus and that there is no prospect of its being used for other purposes. Furthermore, if a governing body were set up along the lines that I set out in new clause 1, the amendment says that the business community should be involved and sets out how that should happen. Amendment 16 is on lines similar to those of new clause 1, although I think that our new clause, which sets up a project delivery board, is a clearer and, I hope, more defined way of doing things.

New clause 1 would improve the Bill in respect of the crucial element of business involvement. There is support in the country for the concept of a business rate supplement delivering an important local project, as long as everybody is clear about what the money is being spent on and everybody is signed up and willing to participate and has a continuing voice in the delivery of the project. I look forward to what the Minister has to say on the new clause, but I should say that I am minded to press it to a vote, should the Minister not agree to it.

I have much sympathy with many of the remarks of the hon. Member for North Cornwall (Dan Rogerson). We debated the issue in detail in Committee and it goes to the heart of how we make the Bill work. My hon. Friends and I make no bones about our position on the Bill in principle: we think it a mistake to use the Bill to impose burdens on businesses, with the exception of Crossrail, in the current climate. That said, if the numbers are against us, let us see what can be done to make the arrangement work better. That is why we are interested in the hon. Gentleman’s proposal.

In Committee, I thought that the Government were not uninterested either; the Under-Secretary of State, the hon. Member for Tooting (Mr. Khan), replied in a constructive way, saying that he and his officials would consider the issue. The hon. Member for North Cornwall referred to the powerful evidence of Dr. Grail, whom Committee members from all parties regarded as one of the most impressive of a strong team of witnesses. I hope that the Department will find a way of taking the issue on board.

Furthermore, there is logic to the proposals, which go right the way back to the Lyons review, which was one of the drivers of the original proposal. It made a point about the importance of securing legitimacy and support from the business community. That works in two ways. The first, to which we shall come later, is the opportunity for businesses to have a genuine say by means of a ballot. The second, every bit as important, is the thought that even if there is a ballot—and I hope that there will be—things should not just stop there. Business has to have an ongoing involvement. There is a compelling logic to that; businesses have perhaps the largest stake in the success of a BRS scheme. They are ultimately the potential beneficiaries, but they are footing the bill at the same time. Furthermore, they are likely to have local and sectoral knowledge to bring to the discussion.

Does my hon. Friend agree that if something was going wrong with a project, the local businesses, because of their nature, would be the first to realise it? Involving local businesses could benefit the project.

I absolutely agree with my hon. Friend, who makes a powerful point. I was a member of a local authority for 16 years and I worked well with excellent local authority officers. However, the fact is that the business man can bring an additional dimension that neither I as an elected member nor the officers were always in a position to bring. If the BRS or business improvement districts are to work on the basis of genuine collaboration between the local authority as a governing body and the business community, having that ongoing and structurally assured involvement is important.

Often the business person will spot something because of the nature of the culture that they are in; it might not be spotted by the elected officers who work in the administrative culture. That hugely powerful point should be taken on board. That is why we tabled amendment 16, which covers much the same ground as new clause 1, although there is an additional factor that I shall come to. Like the approach adopted by the hon. Member for North Cornwall, my approach will be influenced by what Ministers say they have been able to do to take the issue forward.

The point of difference between me and the hon. Gentleman is that his new clause might be a little too prescriptive in specifying the form of delivery vehicle that there must be. In some cases, the project delivery board might be the right vehicle; I can, however, think of some BRS schemes for which it might not be appropriate. That is why, both here and in Committee, I have deliberately cast my amendment in broader terms so that before a decision is made—and before the businesses vote, as I hope they would—the prospectus will set out how that ongoing involvement will take place. That will vary and should have the opportunity to do so, according to the nature of the scheme and the scale, place and sector involved. The point is that the information should be set out before the die is cast and the commitment to the BRS scheme is made. Sometimes, it may be done along the lines of the delivery board model, but not always, which is why I would like greater flexibility.

The other matter that I have added to the original amendment that I tabled in Committee relates to strengthening the requirements on the provision of financial information—an issue that became apparent during the evidence given to the Committee by several people. That provision would introduce an obligation to spell out clearly the moneys that are to be raised in pursuance of the BRS, and what they will be expended on.

I shall make a few brief comments, particularly on new clause 1, because I want to save most of my remarks for the later group dealing with ballots. I pursued an argument in Committee about the changes in local government during the past 15 or 20 years, and the lack of trust. I am not sure whether the hon. Member for North Cornwall (Dan Rogerson) trusts his Liberal Democrat-run councils, but I trust my Labour council to make the right decisions. It is a Labour council that has this year again had a four-star rating, and it has done remarkable work on regeneration and economic delivery in the borough of Halton and working more widely with Merseyside and Cheshire.

The new clause is over-prescriptive in telling local government what it should do. If I were to criticise what this Government have done over the past 12 years, I would say that we have sometimes been a bit over-prescriptive about local government. My right hon. Friend the Minister, dare I say it, took a different view in a number of areas about trusting local government and giving it some say in decisions. It is fine to legislate, and there must be safeguards; one of the safeguards in the Bill is that the Secretary of State can intervene if the procedures laid down in it are not being followed.

I feel that there is an in-built distrust of local government in this House, however, and a lack of willingness to give it more freedom to get on and deliver what many local authorities are already delivering through their tremendous economic development and regeneration policies. I believe that the new clause is over-prescriptive, and we should trust local government more. In these difficult economic times, I do not believe for one moment that local government will do something stupid such as putting businesses and jobs at risk in its own area. I do not think that that will happen.

I was at great pains to say earlier that the relationship between business and local government has improved hugely over the past couple of decades, and that is absolutely right—I remember the hon. Gentleman making that point in Committee. However, we heard evidence in Committee from organisations such as British BIDs to say that the business improvement districts process, through continuing such engagement in a more formalised and recognised way, has been a positive step. The new clause seeks a similar mechanism for the BRS. Although there is a positive relationship in general, when we are talking specifically about an extra levy of cash on business for a specific project, business organisations, and BIDs, which represent everyone involved in those processes, feel that that is a positive model to use.

I do not disagree with the hon. Gentleman’s comments on what was said during the hearings; powerful representations were made. Lessons have been learned from that process, and the way in which local government has responded, working through partnership and co-operation for the benefit of a particular area, has borne that out. That shows that local government is in such a mindset, and we come down to a particular principle.

I shall finish on that point. In many areas, local government is responsible for leading regeneration and economic development. It has come a long way during the past 15 or 20 years and we should trust it more. The new clause and some of the comments made by the hon. Member for Bromley and Chislehurst (Robert Neill) go against that grain, and I fundamentally believe that we should give local government more freedom. We shall no doubt come later to differences as far as Crossrail is concerned—what we want to allow for it, and what we do in the rest of the country. I believe, however, that we must give local authorities more freedom to get on and work locally. Lots of organisations are working together already, and there are already forums for such decisions to be taken by working in partnership. To be prescriptive about the type of forum concerned is the wrong way to go about things.

Given the hon. Gentleman’s point about the forums and procedures that exist to allow bodies to work together, what is his objection, as far as amendment 16 is concerned, to saying that the prospectus should set out how such working together should take place? Amendment 16 is not trying to prescribe a particular model; it is just saying that the information should be set out.

The hon. Gentleman makes my point for me. Why should we do that? In most areas—not every area—these forums already exist, or such co-operation is taking place, so I do not accept what he says. I genuinely believe that we would be telling local government how best to run its local area. I strongly feel that local government should be given the freedom to get on and deliver what is important, working with all the partners in the local area to deliver the sort of improvements that we all want.

The Minister will be aware from previous debates on this matter that I have perhaps a little more sympathy than one or two of my colleagues for the whole principle of business rate supplements. This is not the ideal year for the Bill. Had it been introduced a few years ago, those in my party might not have had the many understandable concerns that we have expressed, representing business interests, given the real financial and economic problems that are facing our businesses.

I fully support my hon. Friend the Member for Bromley and Chislehurst (Robert Neill) in speaking to amendment 16, so I must express some opposition to the comments made by the hon. Member for Halton (Derek Twigg). I worry that the credibility of BRS schemes is crucial. There is a risk of such schemes, particularly the longer ones, seeming to be at quite a distance from the local authority. During what might be a 10 or 12-year scheme—a bigger type of regeneration project perhaps—a range of different councillors may be involved. A certain political party will be in office when a BRS scheme is put into place, and by the time it comes to fruition a different one might be in office. It is therefore all the more important that we have an ongoing input from business in the way that we have set out.

I agree with a number of the comments that have been made, although I have some sympathy with what the hon. Member for North Cornwall (Dan Rogerson) proposed. The notion of having a project delivery board, in the way he sets out, would be over-prescriptive and highly unwieldy. It would detract from what we are trying to achieve. The hon. Gentleman will forgive me if I consider the proposal in the context of Crossrail. How on earth could we have a project delivery board that would avoid being anything more than an extra layer of bureaucracy that left us open to a lot of confusion, if it were given a project of such size that it took into account the views of people from 33 different boroughs?

I am pleased that the hon. Gentleman is exploring the matter and supports us on the general concept, although I appreciate that he is unhappy with some of the details of the new clause. We have been at pains throughout the process to point out that there is a distinction between Crossrail and projects in the rest of the country. Indeed, his own party has sought to do that as well. Although I believe that a mechanism could be found to ensure that local government and the business community in London are represented, we need to consider closely how the system will operate in other areas. We are considering a specific case in London, but the Bill may well be applied across the whole country.

I appreciate that the Bill will not necessarily create fully fledged Crossrails across the board.

The hon. Gentleman made a comparison between the proposed business rate supplements and business improvement districts. I believe that we will return to that matter in other debates this afternoon. It is crucial that we draw a firm distinction between the two. My biggest fear is that by putting the Bill on the statute book, we will allow it to be used for small infrastructure projects that should be covered not by a BRS but by BID-type schemes. A BID works by being highly localised and highly focused, and by working for businesses that, as in my constituency, are often within a couple of roads or a small number of blocks of each other. Those schemes work extremely well, and having some sort of delivery board mechanism makes sense in the context of a highly localised scheme.

My concern, which is implicit in all the amendments in this group, is that no local authority should be able to say, “Right, we’ve now got our BRS scheme through and we do not need to bother with worrying about the concerns of business or anybody else for the next 10 or 12 years”, or however long the project takes. That would be wrong, which is why I support amendment 16. Equally, we should avoid highly prescriptive man-management that would only provide a further level of bureaucracy and confusion. I hope that the Government will give some thought here and in another place to finding a way to ensure that the credibility of BRS schemes is maintained. I know that we will come on to ballots later this afternoon, but my biggest concern is that without some safeguard for business, there is a real risk that credibility will be undermined and the system will simply be seen as another opportunity for a cash-grab from the Government, rather than used for a specific purpose that benefits a business community in infrastructure terms.

I see the need for something that will satisfy the business community that a project is worthy and well managed, but I share the concerns of those who believe that imposing a board in every case might be difficult, inappropriate or unnecessarily bureaucratic. Under the terms of new clause 1, it is difficult to know who from the private sector side would want to volunteer to sit on such a board. We learn from new schedule 1 that there would be no remuneration, and we can imagine that in some cases the meetings would be long and frequent.

Anyone considering sitting on such a board would want to know what their legal duties and responsibilities were and what the consequences might be if something went wrong. Would it be a board in the legal sense, on which a director sits only if he is aware that serious legal duties and requirements are placed on him, and aware of what provision is to be made for officer insurance, professional indemnity and all the other things that anyone placed in that position of trust deals with? If so, that would represent a labour due imposed on top of the cash charge that the business community will be invited to expend. It is bad enough that a company will have to pay the tax, but worse for it to be told that it must put up some people to sit on the supervising board so as not to make an even bigger mess of the scheme. That would mean that they were invited to give of their time free, on top of having to give their money to the project in question. I see certain difficulties in that.

I assume that in line 3 of proposed subsection (1) of new clause 1, we do not need the word “to” twice, and that that is a typing error or misdrafting that could be dealt with.

New schedule 1 provides what support there is for the idea of the board, but it is quite slim. We are told in paragraph 6 that the board’s functions would be specified by regulations. If that idea were to go any further, those regulations would be of great interest to the House, as they are where the meat of the system would be. Currently, we know nothing about the intended responsibilities, duties or legal requirements, the degree of surveillance required or the necessary reporting, accountability and so on.

The objective of allowing scrutiny is to allay suspicion and fear. The appointment of the whole board would be in the hands of local authorities, some of which are very unpopular. In my area we currently have a Liberal local authority that is immensely unpopular. Does my right hon. Friend agree that suspicion would not be allayed if such power were invested in the hands of such an authority?

Yes. I do not want to make this party political, although I have had experience of what my hon. Friend mentions, but a council of any kind could become unpopular. It might make itself unpopular by proposing one of the supplementary levies provided for in the Bill, no doubt on top of a large council tax increase at the capping threshold. Yet under the new schedule, local authorities would not just be given the power to have a third of the representatives and to choose the third who are perhaps intended to be more independent, although that is not stated. They would be given the power to choose the whole lot.

The business community might choose for the board two or three good people who, despite all the obvious aggravation and the lack of wisdom involved in sitting on one of these things, decided that they wanted to do so because there was a big project. The local authority would have every right to say, “No, we’re not having them. We would rather have some friendly, helpful people who are of our political disposition or agree with us about this project”, so that there would be no grit in the oyster and no challenge to how the project was going ahead. The new schedule reveals a weak system, which in certain circumstances would prevent the board from acting as an accountable body with control over costs and responsibility for better project management. If a local authority were determined to drive something through, against the interests of its electorate, it could do so. That is a great weakness in the system that is suggested.

We are told that a board would be established

“at the first instance of an initial prospectus being published for the imposition of an approved BRS”,

and that it would continue for the whole period for which the BRS existed. That means that it would be a long task in many cases, and that, too, would make it more difficult to get people of good quality on the board. We are told:

“In appointing members to the Board the levying authority must have regard to the desirability of securing that the Board is able to perform its functions effectively and efficiently.”

That is a very wide suggestion, and I do not believe that it requires a local authority to have much discipline in choosing people of substance who are likely to provide the critical analysis and accountability that we would like. We are told that everything else will be sorted out in regulations—doubtless, they are still to be drafted.

I therefore have more sympathy with the more wide-ranging amendment 16, in which my hon. Friend the Member for Bromley and Chislehurst (Robert Neill) leaves open the question whether we need such a body, and correctly directs attention to the lack of accountability in the projects if we do not provide for some sort of mechanism. We are here, even at such a late stage in the Bill’s progress, to tell the Government that there is a genuine problem of accountability. The system is unsatisfactory anyway, in that it enables the imposition of big levies on local communities in times of stress. If there is no proper system for engaging them and getting them to believe that a project is well run and that the expenditure is properly controlled, that makes matters far worse. Amendment 16 gives scope for the Government to make regulations under the Bill that might get nearer the mark.

I therefore hope that the Government will use new clause 1 as a prod and a stimulus to improve their Bill. I do not believe that it is quite right, for the reasons that I identified and for others with which I shall not delay House. Perhaps amendment 16 provides a way forward if the Government are willing, and if they are prepared to produce regulations to give some accountability under the law.

We have now moved beyond the programme motion debate and back to the serious scrutiny that has been characteristic of the way in which all hon. Members who have been involved with the Bill have dealt with it. I shall try to respond in kind. I want to encourage the hon. Members for North Cornwall (Dan Rogerson) and for Bromley and Chislehurst (Robert Neill) to feel that they do not need to press either the new clause or the amendment that they respectively tabled.

Let me start by looking for common ground. I agree that it is important for businesses to feel confident about the running of any project to which the business rate supplement contributes a funding stream. It is also important that they are kept informed of a project’s progress and of the costs that are incurred in running it. However, new clause 1 would over-centralise and is too prescriptive, as other hon. Members have pointed out. I intend to achieve the same end through much more flexible means.

I urge the hon. Member for North Cornwall to consider that, if the duty on levying authorities to set up a body to oversee the delivery of any project that was funded or part funded by a business rate supplement existed—even if that supplement were a small element of a much larger funding package, which would inevitably have its own governance arrangements—the authority would still need to establish a project delivery board such as he has described. Although I am with the hon. Gentleman in principle, a moment’s pause suggests that, in practice, the new clause would be too prescriptive. It may not work in all circumstances, and the hon. Member for Cities of London and Westminster (Mr. Field) rightly asked whether we could imagine it working for the arrangements that are properly in place for Crossrail. The new clause is likely to blur the lines of accountability and could lead to less rather than more effective management of the delivery of any project linked to the business rate supplement.

The right hon. Member for Wokingham (Mr. Redwood) made an important point about the new clause. It specifies that the board should be a “body corporate”, which has implications for those who would sit on a board. They may face the possibility of being legally liable and responsible for a project over which they have relatively little direct control. Ultimately, responsibility for such a project must rest with those who are put there to take it.

My preference is in keeping with the arguments that my hon. Friend the Member for Halton (Derek Twigg) presented. The levying authorities, clearly with wide local consultation, are best placed to determine the appropriate governance for a project. It is neither easy nor appropriate to specify that centrally. It should certainly not be done in of the Bill.

Amendment 16 attempts to introduce a similar provision more flexibly. As the hon. Member for Bromley and Chislehurst said, the delivery board model may not always be appropriate. He wants to ensure that the business rate supplement prospectus makes it clear how those paying it can expect to be informed, especially about the amount of revenue that has been raised and how it is being spent. The Bill already provides for that. Paragraph 11 of schedule 1 requires levying authorities to make clear in their prospectus the way in which those liable for the supplement will be informed about the expenditure incurred on a BRS project. It also requires the authorities to set out how they will provide updates on the work until its completion. In other words, levying authorities will not be able to keep in the dark businesses that pay the business rate supplement.

Let me be clear and, by doing so, attempt to be helpful. We also expect levying authorities to consider how they will involve businesses in running any project that is funded or part funded by a business rate supplement. Indeed, in the draft statutory guidance that is out for consultation, we have made it clear that authorities should consider how they can involve businesses over and above the specific statutory consultation. Consultation on the draft statutory guidance closes on 17 April.

Amendment 16 is also too prescriptive. The message in the guidance is clear to authorities: it is important to ensure that those who pay the business rate supplement are informed and involved in running a BRS project. It also gives authorities the scope to determine what is appropriate given the nature of the project and the needs of the local community as well as the desire of local businesses to get involved.

As I said in Committee, consultation on the statutory guidance is under way and we have put down markers in it. I also made it clear to the Committee that we will consider the points that were made in the debate as part of the consultation.

I am grateful for the spirit in which the Minister has approached the matter. I do not seek to be needlessly prescriptive and I am grateful for his comments on paragraph 11. I understand the intention behind his point about the statutory guidance, which is out for consultation, but what is the sanction if a levying authority does not come up with the goods under that guidance? We must give the business community some assurance that there is a fall-back and a sanction.

The hon. Gentleman has a good memory and I am surprised that he has overlooked our detailed discussion in Committee about the provisions that set out the range of sanctions. Ultimately, the Secretary of State has the power to suspend a business rate supplement. Before that point, there is range of other potential interventions and sanctions, which we discussed.

The Minister is generous, as always, in giving way. His response may help us crystallise our thinking about what we do. Does he envisage a position whereby the draft statutory guidance, once it is issued—I do not know what his time frame is or how it will fit in with considerations in another place—will set out how the business community is to be involved before a decision is made? I do not want to be unduly prescriptive, but does he understand that moving in and using sanctions is to shut the stable door after the horse has bolted? We want an assurance that people will be informed before they make a decision about a BRS.

The guidance is statutory and authorities are therefore clearly expected to follow any terms set out in it, especially when it applies to the way in which they are expected to consider a case for a business rate supplement: consulting on the ideas and involving others, including potential BRS payers, in their preparation. We have published the proposed guidance in draft and we will update it after the consultation closes.

I have said that we will take into account the points made in this debate and in Committee in coming to our conclusions about the content of that guidance. I hope that the hon. Members for Bromley and Chislehurst and for North Cornwall will both regard that as a sensible and flexible but nevertheless clear and firm way of ensuring the aims that they seek.

I am pleased to have prompted a debate about the issue, if nothing else, although I sense that there may be a range of views not entirely sympathetic to new clause 1.

I am also grateful to hear the Minister’s determination to ensure that wherever such a project goes forward, the business community will have a role in its ongoing delivery and in the oversight of it. As the hon. Member for Bromley and Chislehurst (Robert Neill) said, the intention behind amendment 16 is to ensure that that is the case. However, I have noticed a tendency in other Bills for things to be left to be clarified later. Although I sadly do not have the resources at my disposal that the Minister does to test every thought that I have and to ensure that everything is drafted as it should be, I wanted new clause 1 to make the Bill more prescriptive and say that there must be a body that formalises the business involvement in an ongoing relationship.

I was also seeking to look at how the BIDs model works. The hon. Member for Cities of London and Westminster (Mr. Field) is absolutely right that BIDs and the BRS will do different things in different places. However, as models for delivery, they provide us with a starting point. I am seeking to press for such a vehicle with new clause 1. The right hon. Member for Wokingham (Mr. Redwood) was keen to pick holes in new clause 1 and to look for areas of disagreement. However, I welcome the fact that he and all other Conservatives Members who have spoken are keen that there should be a safeguard for businesses, so that they can be confident that they have a role to play.

I was not trying to pick holes in new clause 1; I was trying to say that we need a structure that will work. That is what we are groping towards, but it is a pity that the Minister did not tell us whether the schemes would normally be local authority-run schemes or private finance initiative or public-private partnership-type schemes. However, we have to build on whatever command structure is in place and have accountability and representation.

I am grateful to the right hon. Gentleman for that clarification. However, I am concerned that amendment 16 may not be quite as reassuring to the business community, in that it still puts the onus on the local authority to come up with the means.

The right hon. Gentleman talked about the proportion of business people on the body proposed by new clause 1 being only a third. However, the project delivery board would look at the oversight of the whole project. The BRS is part of the finance package, so it would be unfair for the business community to form all or half of that body if its funding was less than that.

Were new clause 1 to be added to the Bill, it might require some clarification, perhaps through discussions in another place. I am seeking to get something in the Bill that sets out clearly that the business community will have a role in the ongoing discussions on how a project is delivered. We are talking about a long-term commitment, and the right hon. Gentleman said that it was unfair to expect the business community to take on that commitment. I have spoken to business organisations—for example, when looking at BIDs and other systems—and it is clear that they can usually find a way through their representative bodies to ensure that the business community’s voice is heard.

Although I am pleased to hear that the Minister is looking at the issues closely and saying to local authorities in the guidance, “You need to show us how you’re going to involve the business community,” I am concerned that the nuclear option of the Secretary of State stepping in and saying, “You cannot proceed,” will not be used in many circumstances. Given that that sanction will be used only in rare circumstances, there is nothing that gives me huge confidence that there will be a systematic way for the business voice to be heard in the ongoing management of a project.

I am grateful to hear what the Minister said about amendment 1. I accept that there may be a need in some circumstances to move beyond that flexibility, but he has put on record his determination that the standard practice should be for everything to be in place at the beginning of the financial year, so that everybody knows what is coming and can plan accordingly.

To sum up my response to this debate, perhaps my new clause 1 is not perfect, but the Bill, too, is imperfect. By seeking to divide the House on my new clause, I hope that we can improve the Bill slightly and leave it to colleagues in another place to tighten up the detail.

Question put, That the clause be read a Second time.

I beg to move, That the clause be read a Second time.

With this it will be convenient to discuss amendment 4, in title, line 3, after ‘development;’, insert

‘to make provision about business improvement districts in consequence of the imposition of a business rate supplement;’.

New clause 2 concerns the interface between business rate supplements and business improvement districts. Although both relate to the promotion of the local economy, BIDs are different from BRSs in a number of respects, as the hon. Member for Cities of London and Westminster (Mr. Field) pointed out. In Committee we examined the differences between the two, highlighting the degree to which the BRS is more likely to support larger-scale, longer-term investment—including infrastructure—whereas BIDs have focused primarily on short-term improvements to enhance the attractiveness, commercial success and security of retail and commercial areas. However, there are similarities. Both are based on the principle of partnership between local authorities and business to promote the local economy. Both involve a levy on the ratepayer—who is the occupier rather than the owner of the property—on top of the normal business rate.

As the Minister responsible for overseeing the introduction of BIDs some six or seven years ago, I am naturally pleased that they have proved to be a success, particularly because—this is another feature common to both BIDs and BRSs—they were not uniformly welcomed when we introduced them. I recall the Opposition’s hostility when we debated the local Government Act 2003. I hope that, just as with the passage of time they have come to recognise that their opposition to BIDs was misplaced, they will come to see over the passage of time that their current opposition to the BRS is also misguided.

Over those six years, there has been a significant growth in the number of BIDs and in their contribution to improving the economic performance of commercial areas in towns and cities all over the country. Dr. Julie Grail is the chief executive of British BIDs, the umbrella body for BIDs throughout the country. During one of our evidence sessions at the beginning of the Bill’s Committee stage—I join the Members who have rightly emphasised the value of those sessions—she told us that 76 BIDs were now operating throughout the country, nearly 20 of them in London.

BIDs can be set up only after a yes vote on a dual-key basis by all the businesses that will be liable for the levy. They are also subject to periodic renewal ballots. The key issue that prompted the new clause was the fact that 14 existing London BIDs are due to be subject to such ballots within the next two years. At precisely the same time, business rate payers will begin to face the business rate supplement for Crossrail. Not surprisingly, Dr. Grail and many others who have been involved in the successful development of BIDs fear that when confronted with both the BRS for Crossrail and the ongoing cost of supporting their local BID, some business rate payers, particularly in difficult economic circumstances, will conclude that they cannot afford to continue to support the BID.

How can participating businesses agreeing to the establishment of a business improvement district know the extent of their future liability?

One of the arrangements that has applied throughout the evolution of BIDs is a proper procedure for defining the objectives of a BID and the level of contribution that will be expected before the proposition is put to a vote, so that when business rate payers come to vote, they will know whether they are receiving value for money. That is a well-established arrangement, and all who are experienced in the way BIDs have operated know that it has proved successful. When businesses feel that a BID will enhance the value of their area, they are likely to vote yes—and, as Dr. Grail pointed out, they have done so in 76 areas.

Does that mean that when the initial objective has been met and a new project has been proposed, the participating businesses will be entitled to another vote?

I am sorry if the hon. Lady did not entirely follow what I said earlier. As I explained, the BID legislation provides for renewal ballots every five years, which means that a BID must submit its proposal to the business rate payers who contribute to it every time it seeks a renewal of its status.

Unlike the BRS for Crossrail, which relates to a single, albeit very large, project, BID schemes usually involve a variety of different arrangements. A scheme may be intended to improve security, perhaps by providing additional policing to enhance shoppers’ safety in a retail area. It may involve environmental improvements to make an area more attractive to visitors, or transport improvements to make it more accessible. It may involve promotional work to attract people who would otherwise not be aware of what was available in a shopping centre. It is entirely up to the BID body itself to decide on its programme. However, that programme must be set out in advance of the first ballot, and when it is due for renewal the BID will be required to set out its programme for the following year. There is a well-established procedure enabling the parties invited to contribute to BIDs to know what they would be getting, and to say either yes or no to it in a ballot.

Although BIDs have generally been successful and are widely seen as such throughout the country, and although the improvements to the local economy which they support are rather different from those supported by the BRS—which, in the case of London, will support the hugely important Crossrail scheme—there is a real risk that, following the introduction of BRSs, several BIDs that are due to be subjected to renewal ballots in the next two years will not survive. That, in my view, would be a very unfortunate consequence. The purpose of my new clause is to find a solution that does not pit BIDs against BRSs, or put either at risk.

The new clause addresses the problem by returning to an issue that has been debated long and hard since BIDs were first introduced: the contribution that might be made by property owners in bid areas to support activity from which they stand to benefit considerably. The BID model was originally developed in north America, where the contributions from the business side come from property owners rather than occupiers. In adapting the model to United Kingdom circumstances, in which business rates are levied on occupiers, we concluded that the BID levy should also apply to occupiers. However strong the argument was for imposing the levy on landowners—and we received forceful representations from many quarters, including property owners who felt that that was right and equitable—it would have required the establishment of a wholly new register of commercial property ownership throughout the country so that property owners could be balloted in the first place and the local authority could subsequently impose the levy, assuming that there was a positive vote. Not only would that have imposed significant cost burdens on local authorities, but it would have been a major bureaucratic exercise and, crucially, delayed the implementation of the BID scheme. At the time, there was a real appetite among the business community, town centre managers and many others to get a move on with BIDs to ensure that the benefits that many saw would come from the establishment of BIDs could be achieved.

I understand the thrust of the new clause and I have some sympathy with it. However, my concern is twofold. First, if the property owner is liable for the BID, at the next lease review is not the cost likely to be placed on the lease? The business user is therefore likely to face the cost anyway. Secondly, how does this relate to accounting? If there is a BID in one town but not in another, the cost may increase in one town but not in another. However, competition between the two may be keen.

If the hon. Gentleman bears with me, he will hear precisely how I believe that the introduction of an owners levy in parallel with the occupiers levy—not as an alternative—will help to avoid the problem of costs being passed from one to the other. In addition, the concept of a BID is entirely compatible with the concept of local democracy. Local communities should be free to decide to do things that they think will enhance their area. Obviously, they will take account of the competition issue. If the businesses in one area do not think it will be to their benefit, they will not vote for it. It is entirely a matter for local decision, and in this case the vote comes from the local business community.

I am sure the right hon. Gentleman agrees that one of the most important tenets of any tax, to make it as efficient as possible, is certainty. Presumably that was one of the issues when six years ago it was determined that BIDs would not go down the route of a levy on property owners. How much evidence is there on the certainty of property ownership? Often it will be difficult to get the money from offshore companies. In introducing the new clause, has he given any thought to how that problem can be overcome?

The hon. Gentleman raises a pertinent point. I am going to address that in detail later in my speech, so if he will bear with me, I will come back to the point, which is relevant and has exercised people. I should stress at this stage that it was not so much a problem of certainty that deterred us from introducing a property owners levy as a basis for BIDs when BIDs were introduced. The obstacle was the cost and time involved in creating a register throughout the country, which would have been necessary, when there was no certainty that BIDs would receive positive votes anywhere. There could have been a lot of abortive cost. Now we are in a different situation, as I will explain.

The Government took the decision, and I do not in any way resile from it, in 2002-03 to proceed with the BIDs on the basis of an occupier levy that could be easily and quickly implemented on the basis of the existing business rates register. At the same time we encouraged the concept of voluntary contributions from property owners to supplement the levy on occupiers, so as to spread the burden and ensure that owners had an involvement and were not excluded from the BID. That has worked reasonably well in a number of BID areas, but not everywhere. It has worked to a considerable degree in key retail locations such as London’s West End, in the area including Regent street, Oxford street and Bond street, which has a BID: the New West End Company, which has been very successful. It has an annual BID levy income of £2.5 million from property occupiers, but it receives an additional £900,000 a year in voluntary contributions from property owners, so the contributions from owners represent about 36 per cent. of the levy income.

It is probably worth making the case that there is one very large landowner in that area: the Crown Estate. Under the scheme that the right hon. Gentleman is envisaging for BIDs and the BRS, property ownership would be much more disparate, at least at freehold level, which would make it far more difficult. He clearly recognises that the New West End Company may have certain benefits and advantages over many of the other 76 BIDs.

That is absolutely right and I am not making my case solely on the basis of the New West End Company, but I am using it to illustrate how a levy has been supplemented by a voluntary contribution from the property owners. However, even there, as I will explain, there are problems.

Dame Judith Mayhew Jonas, who heads the New West End Company, was part of a group of interested parties I was pleased to have the opportunity to take on a delegation to meet the Minister just last week. During the debate that we had on the subject in Committee, he offered to have a meeting with representatives of British BIDs, individual BIDs and the British Property Federation. We had that meeting and I am grateful to him for making that opportunity available. It was a constructive discussion. Dame Judith highlighted a number of weaknesses with the voluntary contribution system. First, it is unstable and unpredictable. Whereas the BID levy is fixed for the full five-year duration of the BID before it comes up for renewal, voluntary contributions can be cut off at any time. Given the significance of the sums—£900,000 a year in the case of the New West End Company—that makes forward planning and budgeting much more difficult.

Secondly, although current owners may commit to a voluntary contribution, there is no guarantee that their commitment will be taken up by their successors if property changes hands, and BIDs are concerned that income is reducing from voluntary contributions as a result of insolvencies and change of ownership.

Is that not the point? All these schemes were dreamed up in a totally different world of rising property prices, rising rentals and strong tenant demand. In a world of crashing property rentals, many voids and falling asset values, it seems that it is no longer appropriate to try to extract the added value when value is being subtracted.

On the contrary. The right hon. Gentleman will know the importance of major infrastructure investment such as Crossrail to the long-term health of the economy of London. He must be aware that, were we to lose confidence and cancel Crossrail, which would be the implication of not proceeding with the Bill, that would have a devastating long-term impact on London's reputation and its economic viability. It is precisely because it is necessary, even in difficult times, to help to support appropriate investment that will help our economy and business, that such arrangements are necessary.

British BIDs has told us that income from voluntary contributions in the Heart of London, another central London BID, have reduced by 34 per cent. in its first three years, so there is a risk of declining income through change of ownership. Thirdly, there is growing resentment among the owners who are making voluntary contributions at what they rightly see as freeloading by other property owners in the BID area who get the benefit of the work of the BID without having to make any contribution. For all those reasons, there is a strong case for revisiting the option of introducing a property owner levy in BID areas. That is given added urgency by the introduction of BRS, which, as I have emphasised, could threaten the survival of several BIDs.

To overcome the objections, notably the cost and time necessary to compile a national property owners register, which prevented this being undertaken when BIDs were introduced, the new clause would apply only in very limited circumstances: first, in areas where BIDs have already been established; and secondly, in areas where a business rate supplement has been introduced. In effect, therefore, the new clause, if it is accepted, will apply only in the early years of business rate supplement within the London area, where there is the only BRS scheme that is likely to be ready to start from 1 April 2010. Even when BRS is picked up in other parts of the country, the provision will apply only in those areas where there is both a BID already in existence and where the BRS scheme is to be applied.

The provisions in the new clause are permissive; they do not require the imposition of a property owner levy. They allow it in circumstances where the existing BID company, board or governing body—I wholly take the point about the need for flexibility in such arrangements, which we debated under the previous group of amendments—decides that it is in favour of pursuing this, subject to exactly similar balloting arrangements as apply in the case of a property occupier levy. In other words, there must be a double-key ballot: a majority vote among the property occupiers and, for the owners levy, the majority of owners voting yes along with the majority of rateable value. Essentially, there has to be support from both large and small-scale occupiers or owners to ensure success. One cannot simply load a cost on to others. That safeguard has worked well in the case of BIDs, and the new clause provides that that should be applied equally in the case of the owner levy.

I am listening to the right hon. Gentleman most carefully and I think I understood him to say that owners will not be able to offload the additional charge on to occupiers. Is he not concerned that occupiers will pay their additional charge as occupiers and then may be required to pay again when the owner transfers the equivalent sum, or recoups the cost, in additional leasing or renting charges?

That is very much the point raised by the hon. Member for Northampton, South (Mr. Binley) and perhaps I will come to it now. I wanted to get to a relevant stage in what is necessarily a rather complex presentation of the new clause.

The proposal would allow the BID company or board to decide what it required in the way of a budget over a period and then to decide whether it wished to seek an apportionment of the cost between property owners on the one side and property occupiers on the other. It should not be required to do that. In my view, it should be equally permissive, with separate ballots to be held of owners and occupiers. Dr. Julie Grail has given evidence, to which I shall refer, from Scotland to demonstrate why flexibility is probably a good thing, but if there is a decision to apportion the cost between the two, the proposition will be put to both the owners and the occupiers that they should meet a set percentage of the agreed budget, which will be set in advance. Both parties would know at the outset what share of the total budget they would meet and what the financial implications would be.

The right hon. Gentleman is most kind and I am very grateful to him for giving way. Can I get it clear in my mind? We have a BID in operation. If we introduce a supplementary rate, is the right hon. Gentleman suggesting that the levying authority would be able to divide the element of supplementary rate between the owners and the occupiers, not exceeding the total of 2 per cent., or is he saying that we could levy even more money by including the owners of the property, while the occupiers would still have to pay both the BID levy and the supplementary rate levy?

I must apologise to the hon. Gentleman. This is complex territory and I am probably not explaining it as well as I should. The apportionment is purely in relation to the contributions to the BID. The business rate supplement—the main purpose of the Bill—would apply only to occupiers. There is no provision for the business rate supplement to apply to owners. My new clause would not change that. It applies only, as I thought I had stressed, to those areas where there are existing BIDs, in which it would be open to the BID board to work with the levying authority. I would hope that the two would work closely together; one of the lessons of BIDs is that close co-operation is crucial to their success. If the board were to propose an apportionment between the element of the BID that would be paid by the occupier and the element that would be paid by the owner, it would be free to do so.

How much extra money does the right hon. Gentleman think would come in as a result of the change?

I tabled the new clause to provide an offset for property occupiers who currently have a liability to pay a BID levy and will also be affected by business rate supplement. The right hon. Gentleman will have heard me say clearly that I would leave it to the BID board to determine what the basis of the levy on owners should be and the amount it would seek to collect. I would expect it to be used to offset the contribution of occupiers; in other words, the extra contribution from owners would offset the liability of the occupiers, which would reduce their contribution and make it less burdensome to meet the additional demand of the business rate supplement. I cannot give an absolute guarantee on that because it would depend on individual circumstances. I hope that the right hon. Gentleman will recognise that that is necessary if we are to leave the control of these operations at a local level, with the board covering the businesses and the levying authority.

On this aspect of the new clause, am I right in understanding that where there is an existing BID, there would be the possibility of this new provision being brought into effect, but that that would also automatically be discussed in any area where a BID proposal is currently still being worked on? That would provide a reassurance to businesses prior to a ballot in any new BID areas, as well as to businesses in an existing BID.

I have already made it clear that this provision will apply only in areas where there is an existing BID, and where business rate supplement is proposed. Those are the two areas that are covered. A new BID would not be covered, and the new clause may need to be improved to address that requirement, because there would be a logic in doing so. However, it also remains the case that the provision would not apply even in areas where there are BIDs unless there is a business rate supplement.

I wonder whether the right hon. Gentleman can provide clarification on the following point. In my neighbouring constituency, with which I have a connection through the main town centre of Ilford, a BID is being voted on at present. Would that also be included, or would it be counted as a new BID?

Even assuming that this new clause is accepted, the Bill still has to pass through Parliament. I do not know the precise timetable for the Ilford BID ballot, but if it is taking place soon, there will be an existing BID within Ilford when the Bill is passed. Therefore, it will be open to the BID, if it is successful, to decide to use this power, if it is available. That would be entirely permissive, however; the BID would not be required to use it.

Other benefits arise from focusing on areas where there are existing BIDs, which is why the new clause is framed in this way. On the whole, there is a good understanding of property ownership in such areas, because the BID itself has, as a matter of course, had to bring together the various business interests—the occupiers, because they are contributing, and the owners, because, in many cases, a voluntary contribution is being sought from the BID and it is necessary to know and understand who those owners are. I am assured by British BIDs as well as the New West End Company that they do not think that in these circumstances it will be difficult, expensive or time consuming to compile a register of ownership in such areas. That was the primary obstacle to the introduction of an owners levy at the outset.

The second safeguard, which is absolutely crucial, is a minimum threshold contribution. If this were to apply across the board to all businesses, I could foresee certain difficulties, such as having to deal with very small pockets of land that might be held in ownership that it would be difficult to identify. However, it is a characteristic of most BIDs that contributions come from significant businesses within an area, and most small businesses in most BID areas are exempt. Therefore, the range of business ownerships that have to be identified will be less, and the risk of serious problems arising will also be less. I therefore believe that this is a practical measure that addresses the problem, and that does so without creating the kind of difficulties that deterred us from adopting an owner register and owner levy when BIDs were first introduced.

I thank the right hon. Gentleman for taking great steps to ensure we understand what is a rather complicated area. Let us consider a situation in which a business rate supplement is in being and a new BID is then mooted; does the right hon. Gentleman fear that the supplementary rate could make it much more difficult for a new BID to be introduced? Let me say to him at this point that I am a fan of BIDs, as I have said both on previous occasions and in a commission I had the privilege to head-up for my party. Does he fear the concept of BIDs becoming less attractive because of this double whammy of costs, albeit split between property owners and property occupiers?

By definition, yes, because, as I have said, I think that there is the possibility of existing BIDs failing to get support in renewal ballots because of the imposition of BRS. It is precisely because of that that I believe it is right to address the long-standing problem of property owners not having had any liability to contribute towards BIDs. I believe that this proposal addresses that problem in a practical way, and that it will make it possible for people to see the case for continuing to support BIDs, albeit the occupiers will be contributing less because the owners will be contributing more as well as meeting the business rate supplement. I believe that, for all these reasons, there are very strong arguments in favour of the approach I advocate.

I have also been struck by the amount of support I have had from a very wide range of organisations. There is strong business backing for the introduction of a property owners levy. The British Property Federation has been closely involved in the preparation of the new clause, and it made clear the degree of both its support and business support for this approach at the meeting that my right hon. Friend the Minister for Local Government arranged a week ago. It is not every day that business welcomes the introduction of a financial levy, and the fact that business and owners’ representatives were saying they welcomed this and thought it was the right way forward for BIDs is doubly telling.

We have also had a letter of strong support from the Mayor of London. It was sent to my right hon. Friend, and I would like to quote from it:

“Further to the Committee Stage debate on property owner involvement in Business Improvement Districts (BIDs) I am writing to express my full support for this measure.

Specifically I support proposals by the British Property Federation ‘to amend the Local Government Act 2003 to allow a BID, where it wanted to, to make the BID levy mandatory for both owners and occupiers, and giving property-owners full rights of BID membership. Similar to occupiers, property owners would only be faced with a levy if a majority by number and rateable value had voted in favour of it.’

The British Property Federation, British BIDs, London BIDs, London First and other organisations have long argued that BIDs should have the power to decide whether or not to include property owners in BIDs. Currently, they are exempt from paying any BID levy. Many property owners have contributed voluntarily to BIDs. Other property owners benefit from the activities of BIDs but do not contribute to them. The Bill represents an opportunity to rectify this imbalance. Also this measure would be a helpful way of ameliorating the impact of the BRS on BIDs by spreading the levy across a wider pool of payers.”

That is what the Mayor of London wrote, and I wholeheartedly agree with his views and hope his letter will lead a number of Members of the same party as him to believe that this is a splendid measure.

While reading the letter, I was very impressed by the Mayor’s grasp of the complexities of the issue, because—as hon. Members will understand from my presentation, which has gone on for too long already—this is complex territory. On reflection, I came to the conclusion that the Mayor’s letter probably owed quite a lot to the input of his chief of staff, the former leader of Westminster city council, who is not only an expert on local government, but was the leader of the council which has, I think, the largest number of BIDs of any authority in the country. Therefore, he is fairly expert in this matter.

I have been following the right hon. Gentleman’s remarks to the best of my ability. When business owners are consulted about a new BID proposal, do they have to give a unanimously positive response, or does there need to be a positive response from a certain proportion of those approached? What does “majority” mean, if there is to be a majority vote? If the proportions are 49 per cent. to 51 per cent. will the scheme go ahead?

The procedure is the same as the one that applies to the property occupiers ballot. There has to be a numerical majority among the occupiers in the areas who will be liable to the levy and there has to be a majority according to the rateable value, too. It is a double key ballot that requires a majority on both counts before the levy can be imposed. That has worked extremely well with BIDs and it is strongly recommended by the business interests that are supporting the new clause as a similar safeguard for property owners to that which exists for property occupiers.

I hope that the cross-party endorsement of new clause 2, which is clear from the Mayor of London’s support for it, will be reaffirmed this afternoon. It is a practical measure that addresses the short-term challenge of the potential adverse impact of the BRS on BIDs and the longer-term challenge of ensuring an equitable and sustainable funding base for BIDs. I have been greatly heartened by the degree of support that new clause 2 has attracted from all quarters, and I hope that my right hon. Friend the Minister, if he is unable to accept it here and now, will be able to give us assurances that the Government will be prepared to amend the Bill in the other place to give effect to the intentions of the clause.

I accept entirely that details are needed about how the ballot and the dual-key safeguards will apply in practice. Complex issues will need to be clarified before the property owner levy can be introduced. We touched on several of those issues in the meeting that my right hon. Friend the Minister set up last week with the interested parties from BIDs and the British Property Federation. Dr. Julie Grail of British BIDs has prepared a very helpful paper on the subject. I accept her judgment that none of the details is a show-stopper and I feel confident that they can be dealt with in regulations to avoid any delay in incorporating the principle of a permissive property owner levy in the Bill.

We also have the experience of Scotland, where a property owner levy has been implemented as an option as part of the BIDs scheme. As British BIDs has pointed out, only two of the Scottish BIDs have chosen to apportion the levy between owners and occupiers, which reinforces the case for allowing the greatest flexibility in how the scheme is implemented area by area.

In conclusion, I commend new clause 2 to the House as a pragmatic response to a real challenge and as a measure that has secured widespread support from those concerned with improving the effective operation of BIDs and the longer-term objective of enhancing the economic competitiveness of our towns and cities.

I am grateful to the right hon. Member for Greenwich and Woolwich (Mr. Raynsford) both for having reintroduced his clause in a slightly different form from the one that we saw in Committee and for having returned to the issue, which is very serious and warrants significant consideration. Like hon. Members from all parties, I am grateful for the care that he has taken to outline the issue. It is necessarily complex and somewhat technical and, ironically, it is a good demonstration of how regrettable it is that we are constrained by the programme motion that was passed earlier. This one element of the Bill will take up a considerable part of Report, but that is necessary so we can get our heads around the detail.

Let us step back to the objective behind the new clause, on which I think I am in agreement with the right hon. Gentleman. This issue was flagged up to the Government at an early stage and they need to address it: how will we deal with the potential interaction of BIDs and the BRS in a way that does not place an undue burden on businesses? Some of us would perhaps not start from this point, but if we have that interaction we need at the very least to try to ameliorate the situation to the greatest possible degree. That is the issue that I want to see addressed.

If the right hon. Gentleman’s formulation can be taken forward following work and tweaking, I hope that the Government will consider it sympathetically. I take on board the comments made by the Mayor of London. There is a lot more detail that we probably need to explore, and that might need to be done elsewhere, but I hope that the Government will respond seriously to the proposal. The assurance that my right hon. and hon. Friends and I want is that there should ultimately be no perverse consequence of such a provision, either through the total revenue take being increased through the back door or through some failure to pass on in practice, regardless of any good intentions, the offset of the owner levy to ameliorate and reduce the bid that comes down to the occupiers. If those concerns can be met, the proposal warrants consideration.

Is that not the danger? In this climate, when there will be very little private finance for such schemes, will it not be very tempting for the BID organisations to say, “We can find another bunch of people and companies that have to pay too” and to simply ask for more money from the levy because they will get less money from elsewhere?

That is precisely the risk. It concerns me with regard not only to the new clause but to the Bill in general. Local authorities as well the promoting bodies of BIDs will be tempted always to go down that route. It might be possible, with good will and work from all parties, for a solution to be found. I get the impression that the right hon. Member for Greenwich and Woolwich will not press his proposal to a vote today, but I hope that what I have said is of some help in concentrating minds on finding a way forward.

Does my hon. Friend share my concern that where BID schemes are being voted on an element of fear might be put into businesses—even though it might not be accurate—and that that might force them to vote the opposite way to how we might want them to vote? Like my hon. Friend, I am a great supporter of BIDs.

My hon. Friend highlights one of the conundrums that the Government have created in their handling of this matter. I am prepared to learn from experience and see the advantage of BIDs. Given that we have a ballot for BIDs but do not have a guaranteed ballot for the BRS, the accumulation of the BRS plus BIDs plus other costs will ratchet up a fear factor and will also cause businesses to wonder where they can take some steps to cut costs, and because they cannot vote against the BRS they will vote against the BID. That will be a shame, because the BID will often be a desirable and worthwhile project. I think that the right hon. Member for Greenwich and Woolwich takes that point on board and we are all looking for a means to prevent that from happening. Perhaps it is work in progress at the moment, but that is why I have made sympathetic noises without committing to the detail. Avoiding the perverse incentive mentioned by my right hon. Friend the Member for Wokingham (Mr. Redwood) and others will be crucial in seeing that the provision delivers the results that are wanted in practice.

I have shown where I am coming from and I shall be interested to see how the Minister responds, because the issue needs to be dealt with. We had considered other alternatives at other points in the Bill, such as automatic offsets. I am not seeking to return to those alternatives at this stage, but the conundrum of the interaction has to be resolved and the Bill as drafted does not achieve that.

I echo the comments made by the hon. Member for Bromley and Chislehurst (Robert Neill) in saying that the right hon. Member for Greenwich and Woolwich (Mr. Raynsford), in tabling his new clause, has sought within the constraints of the Bill to revisit the BID system that he played a great role in introducing. As other hon. Members have said, it has proved to be a beneficial process and I am sure that it will continue to be so.

As was said at the beginning of the debate, there has been a conflict in the minds of business people who have been asked to consider whether they should support an ongoing BID in their area or whether they should be part of putting together a new BID when there is the prospect—as there is in London—of a supplementary business rate being levied, too. It has been clear to me from discussions that I have had with representative business organisations that the sort of approach that the right hon. Gentleman wants to take and that he is encouraging the Government to adopt represents a way forward. The British Property Federation, the representative organisation of the people whom right hon. and hon. Members are seeking to protect—that is, property owners—has been keen to point out that it supports this way forward. That reassures me, as I am sure it does other Members.

Inevitably, because we are not talking about legislation to revisit BIDs and widen their scope, the new clause is limited in scope. Therefore, I return to what I said in my earlier intervention on the right hon. Member for Greenwich and Woolwich: the proposal does not allow us to address the formation of new bids. As a result, there is a disincentive for a BID to be successful in the ballot and that would be unfortunate for the areas involved if they are also facing the prospect of a BRS.

When the Minister responds, I hope that he will explore these matters in more detail. Although my party supports the concept of a supplementary business rate where a ballot has been held to determine local approval—an issue to which I hope to return in respect of a later set of amendments—we would regret anything that called into question the benefits of a positive BID process, which will help a local area’s residents generally, as well as its visitors, business community and property owners.

For those reasons, my party supports what the right hon. Member for Greenwich and Woolwich is trying to do. We very much appreciate the lengths to which he has gone to explore the matter fully, and to consult widely before our debate this afternoon. I congratulate him on his contribution and hope that, regardless of whether this new clause is accepted, we will hear about a way forward that will satisfy the concerns that have been raised.

I, too, praise the right hon. Member for Greenwich and Woolwich for the way in which he spoke to his proposal. He has drawn the House’s attention to a very important matter, and if some Ministers spoke to their amendments in similar detail and with similar concern for the House, we would have much better informed debates generally, and perhaps better legislation. [Interruption.] I am not referring to the Minister dealing with the debate today, but if he feels that my remark applies to him, I hope that he will demonstrate shortly that it need not do so. He certainly made no sensible contribution to the earlier debate on the allocate of time, but we live in hope that he might make a sensible response to the points that we are making about the Bill, as I believe he did in Committee.

I think that the right hon. Member for Greenwich and Woolwich is trying to paper over some cracks with this proposal. As a Minister, he was the architect and sponsor of the BIDs scheme, which has met with quite a lot of approval in the places that it has affected. It has been used in areas with councils of different political persuasions, often to good effect. However, he sees the danger that the supplementary levy will hit exactly the same people who are financing the BIDs scheme, at a time when the world has changed dramatically.

I am afraid that the Minister has to deal with the very important point that all these schemes—the BIDs idea, the supplementary levy and some of the other ideas that the Government have floated and not proceeded with—rested on the heroic assumptions that rents and property values would go up and that most properties would find tenants very easily. The idea was to try to capture, for the public sector and the common weal, some of the enhanced value that the private sector seems to create so easily. The aim, through the variation of levies and betterment charges and so on, was that some of the gain could be shared, as well as to provide public infrastructure and support to the glamorous private sector developments that were going ahead.

This is not the place to debate all that again. Indeed, I do not think that we can have that sort of debate any more anyway, because that is no longer what the real world is like. In today’s real world, there will be fewer tenants and more void properties. Rentals are falling and could fall a lot further, while commercial property values have fallen some 30 per cent. from their peak and many experts feel that they will fall further. That is not a good background for doubling charges, and the proposed scheme looks like one that might have been designed by a firm called Clobber and Clobber. That is, an area is clobbered first of all with a BID, and then again with the supplementary levy.

My right hon. Friend is making his case very powerfully, and he is right to say that there was a sense that things would go from good to even better over the years ahead. However, does he agree that there is at least some mileage in the notion of value capture? Although I think that it is right for Opposition Members to stand up for our much-beleaguered business sector just now, does he accept that there is a risk that we are failing to put in place something that could be of use in the upturn? Provided that there are the safeguards that we have discussed, especially in relation to balloting, might not an idea such as the business rate supplement be the right way to find elements of the funding that will be needed as the economy moves out of recession, not least because of the value capture to which he and I have referred? I must add that I probably share his fears that the recession and downturn are likely to be part of the economic tableau before us for quite some time to come.

I think that my hon. Friend and I can agree that the current situation is bad and will get worse, and that this therefore is not the time to introduce an extra levy.

The right hon. Gentleman is setting out what is clearly a cautionary principle, and it is right and proper that we acknowledge it. However, at the risk of starting another debate about his view of how local government operates—as opposed to the one expressed by other hon. Members, especially the hon. Member for Halton (Derek Twigg)—I venture to suggest that the BID process is slightly different. The organisations operating the BID, which would therefore decide how an offset would work, include bodies apart from just the local authority. As the right hon. Member for Greenwich and Woolwich (Mr. Raynsford) said, the BID would be operated by a wider group. That is certainly some reassurance to me, and I hope that the right hon. Member for Wokingham (Mr. Redwood) agrees.

I accept that, and there will be some examples of good BID organisations that would not go down the route that I am setting out. However, the hon. Gentleman will accept that the local authority often starts with an important role in a BID organisation, or comes to play such a role, because it has the necessary public funding and staff. Local authorities in that situation are in some ways the continuity people. When the private sector is in a state of financial haemorrhage and collapse, it loses time, confidence, money and power in the BID organisations. Proportionally, the power and confidence of the public sector rises, and that is what is happening very visibly at the moment.

When the BIDs were introduced, some people in the business community expressed the fear that local authorities would simply substitute business contributions for their expenditure. I am pleased to say that actual practice on the ground has shown the business community to be pretty canny, on the whole. Its members vote in favour of BIDs only when they have been reassured by the local authority that it will continue and in some cases enhance its contributions to those areas. I would expect there to be a similar positive and constructive dialogue between the two parties in the context of the owners levy that I am proposing.

I am sure that the right hon. Gentleman is right; he has more experience of BIDs than I do. There are many examples of such good practice, but I think that he would concede that what I am saying is possible. I am not saying that it would be a typical experience; I am sure that there will still be many good BIDs and that the business communities will stay fully engaged in many places, but he should not underestimate how much stuffing is being knocked out of the business community by the day-to-day pressures on cash flow, the collapse of turnover and the difficulty in getting access to banking facilities. That is sometimes going to make even the best of intentions among the business community difficult to carry through. Businesses simply will not have the time to do these things, let alone the cash, or the intellectual self-confidence, given the recent very destructive few months, which have hit them badly.

Like my hon. Friend the Member for Bromley and Chislehurst, who is leading for us on this issue, I am not ill-disposed to what the right hon. Gentleman is trying to do. If I felt that the words could mirror exactly what he wished to achieve, and if there were a cap on the ability to take extra money out of the community, I would be much more in favour of the proposal. I would like to hear the Minister’s response, to see whether it might be possible to find a way forward. I hope that he will equally understand my concern—alongside those of the right hon. Gentleman—that at this juncture, above all, the main aim of the House should be not to take more money off the business community.

I want to elaborate a little on what I said in an earlier intervention, and I hope that the Minister will be able to respond to this point. Let us take Ilford as a prime example in relation to these measures. A BID scheme has been proposed, and Crossrail will also be coming to, and bringing great benefit to, Ilford. I fully support both projects, but some members of the community might not understand these proposals. They were eloquently explained by the right hon. Member for Greenwich and Woolwich (Mr. Raynsford), but they would have to be explained to people to ensure that no one voted against the BID scheme purely because they were worried about the business rate supplement for Crossrail, when both projects are so badly needed, especially at times such as these, to encourage people into the area, bringing more money with them and creating more jobs. Both schemes are therefore vital, and I hope that the Minister will be able to put my fears to rest.

I am grateful to my right hon. Friend the Member for Greenwich and Woolwich (Mr. Raynsford) for tabling this new clause. I pay tribute to him for the way in which he has prepared his case and pursued it, and not least for the way in which he has marshalled an impressively wide range of support for his proposal. It was a reminder to us all of why he is held in such high regard as one of my predecessors.

The House has already acknowledged, today and in Committee, my right hon. Friend’s essential role in introducing the legislation that enabled business improvement districts to be established. Despite the reservations of some Opposition Members at that time, we have now had several years’ experience of BIDs. There are more than 70 up and running in different parts of the country and I am happy to say that there is now all-party support for them, both here and in local government. The last thing we want to do is to undermine BIDs through the introduction of the BRS. The Bill enables authorities introducing a BRS to offset a BID liability against the BRS. This approach was based on our overall approach to the BRS. BRS is a new discretionary power for authorities to use, and it is consistent to allow the authorities to decide whether to use an automatic offset for BID payments, according to the needs of their area.

We have had a debate about automatic offsets in the earlier stages of the Bill, and I hope that we have now settled that matter. Even the chief executive of British BIDs, Dr. Julie Grail, made it clear that she was not necessarily advocating them. In our debates about offsetting, and in our general debates about the value of BIDs, it has become clear that offsetting might not be the only solution. It is also clear that there is some merit in involving property owners in business improvement districts on more than a voluntary basis. That case has been made again, in great detail, by my right hon. Friend this afternoon, and it is backed not only by BIDs but by leading organisations representing property owners, including the British Property Federation. It is also supported by the operation of exactly this arrangement in two areas of Scotland, where property owners are involved in BIDs in this way.

If we are to change the present arrangements—I want to make it clear that I am willing to do so—it is essential that we get these measures right. I am grateful for the encouragement by the hon. Member for Bromley and Chislehurst (Robert Neill) to look sympathetically at this approach, and I am grateful to the hon. Member for North Cornwall (Dan Rogerson) for his support for the approach that my right hon. Friend is taking and for what he is trying to achieve.

We have more work to do in ensuring that that measure would be optional for business improvement districts. We also need to do more work on determining how the arrangements for property owners would work alongside those for occupiers, and on putting in place a satisfactory mechanism for collecting BID levies from the owners of occupied properties. I would like to get this detailed work done, in close consultation with my right hon. Friend and with the organisations that are supporting him. If we can do this, as I aim to do, I will then look forward to having the support of both the Opposition parties for this approach, and for any amendments that we might table in another place.

I hope that, on that basis, my right hon. Friend will feel that I have accepted his case and captured the spirit of it. I am determined to do the necessary work on the detail, and I hope that he will feel able to withdraw his new clause this afternoon.

I am extremely grateful to my right hon. Friend for that most encouraging response. I fully understand the need for further work to be done, and I hope that, as a result of that work, some of the searches for reassurance that we have heard from Opposition Members will be satisfied. I genuinely believe that this proposal holds out the prospect of not only safeguarding the survival of BIDs when BRS comes in, but of providing a more sustainable basis for the future of BIDs in the long term. Across the whole House, we recognise that the BIDs initiative has been successful in helping to enhance our towns and cities.

I am extremely grateful to my right hon. Friend the Minister, and I look forward to working with him. I shall make myself available to do so whenever necessary. I know that the many bodies outside the House that have supported the approach set out in new clause 2 will also want to play their role in helping him to define a practical way of moving forward. I very much hope that he will be able to table an amendment in another place; I would see that as an important step forward. Given the assurance that I have received from him, I beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.

Clause 2

Levying authorities

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

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

(e) the National Assembly for Wales.’.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

rose—

I give way to the right hon. Gentleman, whose views on the topic I respect.

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

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

Good try!

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

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

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

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

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

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

I have been advised that hon. Members seek a Division on amendment 16.

On amendments 15 and 16.

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

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

Schedule 1

Information to be included in a prospectus for a BRS

Amendment proposed: 16, in page 22, line 16, at end insert—

‘11A A description of the arrangements by which persons paying the BRS shall—

(a) be kept informed of what monies have been raised in pursuance of the BRS and how they have been expended, and

(b) be represented upon the governing body of any organisation set up for the purposes of delivering the objectives of the BRS, or, if such organisation is not to be set up, how such persons are to be involved in the oversight of the delivery of such objectives.’.—(Robert Neill.)

Question put, That the amendment be made.

I beg to move, That the Bill be now read the Third time.

Through each stage of the Bill, I have been impressed by, and grateful for, the serious level of scrutiny by all Members—[Interruption.]

Order. If Members are leaving, will they leave quietly and if they are not leaving, will they remain quietly?

I welcome the degree of interest in the Third Reading expressed by those on the Government Benches. The level of serious scrutiny given to the Bill by Members from all parties is very welcome and is important to the House. We have benefited from the contributions of Members representing areas in the north and the south, Members representing both rural and urban constituencies and, indeed, those from London and from well beyond it.

The Bill introduces a discretionary power for upper-level local authorities and, in London, the Greater London Authority to levy a limited supplement to the business rate to fund projects intended to promote economic development. We are not imposing a new business tax; we are introducing a new power to allow local authorities—with serious safeguards for business—to raise some of the money that they need to boost their local economies. London is a leading example of that principle, and of the purpose of the new power. The business rate supplement in London will enable the Mayor to make good his commitment to an essential part of the funding package and allow Crossrail to go ahead. It will boost recovery in this part of the country and long-term growth in London.

Will the Minister give way?

I have only just begun my speech, but I will give way.

That is generous of the Minister. I wanted to comment specifically on what he has just said about London. As he will know, the circumstances of the 32 London boroughs vary enormously. I am sure that outer- London borough councils such as Havering—which has received a central Government grant of £240 per head, compared with the average of £526 per head—will be tempted by the prospect of raising additional funds through the supplementary rate. The financial circumstances of such councils are very different from the circumstances of the councils in the west end of London to which the right hon. Member for Greenwich and Woolwich (Mr. Raynsford) referred earlier, with their prosperous businesses. The outer-London boroughs tend to contain very small businesses.

The hon. Lady is right to say that the circumstances of the London boroughs vary, but she may have missed what I said immediately before I gave way to her. In London, the authority with the power to levy the business rate supplement will be the GLA, not the London borough councils. This will not be a choice, or a power, that is exercisable by the hon. Lady’s own London borough council.

I recognise that the present difficult economic period makes it much harder for the House to deal with legislation of this kind, but it should also be recognised that, during such difficult financial times, there is a risk that investment and major projects will be sidelined because of short-term concerns. There is also a risk that we will retreat to a centralism that removes local discretion and flexibility, particularly when tough choices need to be made. Furthermore, there is a risk that we will not establish the powers and policies relating to skills, regeneration and worklessness that will be necessary both to see us through the current downturn and, more important, to enable us to make the most of the upturn that will follow.

Opposition Members have made the important point that businesses are under considerable pressure and stress and strain at present. We all know that that is the case because of what we see in our constituencies and the figures that we see in the newspapers every day. However—this is a point that I made repeatedly in Committee—are not local authorities an important part of the solution, and are they not also under great pressure in having to meet the extra demands being made of them? They are well aware of the pressures on business, and they are providing additional services to help people. It should be recognised that, because of the stresses and strains that they are experiencing, local authorities want to work in partnership with business rather than imposing extra burdens on it.

My hon. Friend is right. He has made the same point at several stages during the Bill’s progress. However, the Bill builds on a strong existing working relationship between local authorities and local businesses. My hon. Friend may recall that during one of the evidence sessions the director general of the British Chambers of Commerce, David Frost, told us that

“relationships between chambers of commerce and local authorities are extraordinarily strong”.

As my hon. Friend says, the Bill provides an opportunity for authorities and businesses to plan major projects for the future. Such projects can contribute to the economic recovery and, more important, to the future long-term growth of areas, but it will take time for them to develop. If we are to channel investment to support the upturn and the success that will follow it, we need to make preparations now. Difficult as it is for the House to deal with the Bill at this time, it is part of the foundation for that upturn.

At each stage of the Bill, we have discussed the interaction between business rate supplements and business improvement districts, and at each stage concern has been expressed about business improvement districts. I am glad to say that our debates have confirmed that there is now strong cross-party support for BIDs, recognition of their success and a cross-party desire to protect them, where that is possible. We will no doubt return in the other place, following the debate on new clause 2 and the further work that I intend to ensure that we undertake, to the proposals of my right hon. Friend the Member for Greenwich and Woolwich (Mr. Raynsford).

Concerns have been expressed on behalf of business and by business. I understand those, but the BRS will not come out of the blue for any business in any area. Local authorities will work with their local businesses to create projects and to examine whether the BRS may form part of the funding for those. As I have said, that will build on the strong relationships between local authorities and local businesses.

We have been urged to go further in the Bill not just by those who gave evidence to the Public Bill Committee, but by the all-party Select Committee on Communities and Local Government and the all-party Conservative-led Local Government Association. They have argued for an increase in the threshold for the business rate supplement; for discretion for local authorities as to whether and when to have ballots on the introduction of a BRS; and for freedom to use BRS funding for purposes other than the economic development of the local area.

We had a thorough discussion in Committee, but I still have a question about eligibility to vote on BRS schemes and whether the regulations might give local authorities flexibility to allow businesses that actually pay rates to participate, rather than those that are simply liable to pay a charge. On Second Reading, I used the example of a local Conservative councillor who operates three public houses in Newcastle-under-Lyme and who, over six years, has avoided paying business rates. He has not been disciplined in any way. The council does not respond to freedom of information requests but it has confirmed to me that, yet again, his businesses are substantially in arrears. Quite apart from the fact that an elected representative should set an example, my question is whether, in those circumstances, the regulations might give local authorities the discretion to say “You will not be able to participate and therefore influence a BRS scheme if you do not pay your business rates.”

Action by any business tax payer deliberately to avoid payment of the business taxes that they are legally liable to pay is a disgrace. When they fail to pay the taxes they are legally liable to pay, others have to make good that shortfall. Therefore, by doing that, they are spreading the burden of taxation on to others who can and will pay, rather than those who can pay but will not.

Concerns have been expressed among business about the financial implications of a BRS, especially at this time, and we have taken them seriously. We have built into the Bill a series of safeguards for business. For example, no business with a rateable value of less than £50,000 will be liable for a BRS. Any local authority that is looking to introduce a BRS can make that threshold higher and more generous still. There is also a requirement for statutory consultation with all affected business rate payers and ballots will be held if a BRS exceeds more than a third of the total cost of a project. Any authority that may levy a BRS also has the discretion to introduce a taper above the £50,000 threshold and to phase in a BRS over a number of years. In addition, if it thinks it appropriate, it has the discretion to exempt empty properties from a BRS.

The Minister is generous in giving way and it is appreciated. He referred to the £50,000 rateable value limit, but the Bill does not come into effect until April 2010, by which time we should have had a revaluation. I wonder whether he will give hope to small businesses by saying today that he would be willing to look at that figure, because if he does not, many more small businesses could be brought into the net.

In effect, nine out of 10 businesses fall below a rateable value threshold of £50,000. If the hon. Gentleman has small businesses in mind, it is highly likely that they will be below rather than above that threshold. There is merit in consistency. We have set the minimum threshold at £50,000 and have been consistent on that. We are allowing local levying authorities to set a higher threshold if they wish and if the terms of the scheme suggest that that is right. Once that is in place and operating, there may be a case for looking at how it is working, including the question of the threshold. But it is important to be able to get this in place with a degree of certainty so that businesses can look ahead and know whether or not they are likely to be liable to pay the business rate supplement if, indeed, one is proposed for their area.

The Minister cannot tell me what the average rateable value will be and we know that the revaluation will be based on the peak property prices in early 2008. Also, rateable values descend as we move out from town centres. Many independent retail businesses in valuable properties in town centres are struggling to survive at the moment, so the level of the rateable value threshold is vital to them.

I understand the reason for the hon. Gentleman’s concern and the case he has made; he has made it eloquently in Committee as well. Equally, it does not change our stance. I do not wish to repeat myself and the hon. Gentleman can refer to the Official Report tomorrow.

The Bill has faced, and stood up to, extensive scrutiny in the House. The Bill sets up a limited but valuable and workable framework from which all businesses could benefit in the long term. I await with interest the debates and comments that we expect from the other place as the Bill passes through there. I commend the Bill to the House.

I was reminded of the earlier observations by my right hon. Friend the Member for Wokingham (Mr. Redwood) about the insidiousness of timetable motions. This substantial Bill has been debated constructively and positively, but the reality is that the operation of the timetable motion means that the Third Reading debate is such a truncated ritual as to be effectively meaningless. Perhaps we need to think about the values of parliamentary procedure.

We have sought to amend the Bill constructively. We accept its operation in relation to the Crossrail project—the one area where the debate became a little charged at times—but we are where we are. I hear what the Minister says and I pay tribute to him for the courteous way in which he and his ministerial colleagues dealt with the Bill and its detail. As always, it has been a pleasure for Front-Bench Members on both sides to interact on the Bill. That said, we remain unpersuaded that the particular situation of Crossrail justifies the roll-out of a power—albeit a discretionary one—elsewhere in the country. The particular economic circumstances make that especially inappropriate at this time. We should take on board some of the third party observations that were helpfully relayed to the Committee in its evidence sessions. The British Chambers of Commerce made the point that we cannot just look at the discretionary power in isolation. We must consider the business rate supplement in combination with the other burdens on business: the possibility of community infrastructure levies; in some local authorities, the possibility of congestion charging; and the possibility of workplace parking levies, which have to be taken into account in relation to BID levies. All of those together can create a potentially threatening mixture of burdens for firms in a difficult time. That is why we have concerns about the timing of the Bill.

I am not at all against giving local authorities incentives to assist in the generation of economic development. That is why I think it is ironic that we are introducing this discretionary power to charge businesses more at the same time as the Government have reduced drastically the funding available to the local authority business growth incentive scheme. That juxtaposition causes many of us to be very cynical about the ultimate motivation, particularly behind the Treasury’s approach to the Bill.

Many businesses are struggling at present, and there are missed opportunities in that this Bill could have embraced measures to try to improve their situation. If there is to be a discretionary power to levy a business rate supplement, why not also use the Bill as an opportunity to give a discretionary power to levy a business rate discount? That would have won support in all parts of the House, and I am sad that that opportunity to bring some relief in areas of difficulty was not taken.

As my hon. Friend the Member for Northampton, South (Mr. Binley) pointed out, it is a pity, too, that opportunities have not been taken to address problems arising from a possible revaluation that may be based on data that are significantly out of date and out of alignment with the current and future economic situation. It would also have been useful if we had taken the opportunity to make small business rate relief automatic, and taken on board the proposals in the private Member’s Bill of my hon. Friend the Member for Mid-Worcestershire (Peter Luff), especially as when the Under-Secretary of State for Communities and Local Government, the hon. Member for Tooting (Mr. Khan), replied to it on Friday, what he said suggested there was some sympathy for it. There is a sadness, therefore, in that this Bill could have done much more to address the needs of small businesses, but it instead focused on the national roll-out of a scheme that we do not think is appropriate for current circumstances.

Against that background, and given that we have limited time available, I will not rehash all the arguments that have been made. I hope, however, that when the Bill passes to the other place, the opportunity will be taken to pursue some of those issues on which it was agreed that improvements could be made and more could be done. I note in particular the new clause of the right hon. Member for Greenwich and Woolwich (Mr. Raynsford), to which Members on both sides of the House were sympathetic, and I hope something can be done in that regard. I hope, too, that we can take forward constructively in the other place what we discussed on Report about the various models by which we can ensure that, if we are to have the BRS system, the business community is party not only to the early stage of its development, but the outworking of the Bill.

Although measures can be taken to improve the Bill, that does not alter the fact that we remain unhappy with it. We do not intend to vote against it on Third Reading in this House, but we now have to hope that local authorities will show forbearance by not exercising a power that could have unintended harmful consequences in the current circumstances. That is my concern, and that is why we have set out our caveats, and why we look forward to seeing what can be done to the Bill in another place.

I agree that, as ever, the ministerial team, the civil servants and the Opposition Front-Bench team have conducted the debate and the flow of information in respect of the Bill very constructively, which has been most helpful. I also wish to place on record my thanks to three individuals who have helped me prepare: Beth Warmington, Alex Davies and Lucy Monks put a great deal of work into this Bill, as they have on many other things.

The Bill is a missed opportunity, in that there are some steps that have not been taken. We are very keen on the principle of allowing local authorities to explore whether this measure is appropriate in their area, which is why we were not able to support the Conservative amendment to restrict it to being a London-only measure. Sadly, however, given the time restriction, we were not able to have a debate about ballots, which is where we part company with the Government, as the Minister knows, because we believe that a ballot should be held in all circumstances.

Does the hon. Gentleman agree that balloting would be the most sensible way of engaging the business community and getting it behind and on side with all aspects of the Bill?

Absolutely. I agree with the hon. Gentleman. I think that that has been the feeling of just about everybody on the Opposition Benches throughout the various stages of the Bill.

We feel that the Bill makes a useful contribution to the big task that local authorities will face, which, as the hon. Member for Halton (Derek Twigg) said, will be in advising and working with business and preparing for the reconstruction of local economies given the circumstances in which we find ourselves. However, we believe that local businesses ought to have more to say through a ballot and that they ought to have greater involvement in the administration of a project through whatever means the Government come up with. Of course, I should put on record the fact that my party supports Crossrail, although that has been almost a separate debate. For that reason, as well as because of our agreement with the principle behind the Bill, even if we have grave doubts about its operation in its current form, we will not oppose it at this stage and we will allow our noble Friends further to consider it.

I hope that when the Bill is debated in the other place, the Government will have a slightly more generous attitude towards giving way on some of the crucial issues, such as ballots. Perhaps they will revisit business involvement in ongoing oversight and, of course, the interaction with BIDs in order to reassure businesses that they can support BIDs as well as major infrastructure projects to which the BRS might make a contribution.

I want to make a brief speech to finish what I was saying before the last vote. First, I completely support what my right hon. and hon. Friends on the Front Bench have said. They have been extremely good at listening to the arguments, taking on board the concerns, ensuring that there are safeguards in the Bill and listening to ideas about how they can further those safeguards. I congratulate them on that.

The Opposition are strong on saying that certain provisions are not great for business and that they will harm business, yet they produce no evidence that that is the case. I listened to what the CBI, the British Chambers of Commerce and other business representatives had to say in the Committee hearings and they made some strong points, but I was left with a disappointing overall view that we still do not trust local government. My experience on the ground does not match up with that. In my area I see a great deal of partnership working and working together to try to deal with the issues that challenge businesses and local communities, and I know that that happens in other areas, too.

A point was made earlier about the difficult economic climate and it is probably more important than ever that we consider the infrastructure and economic development needs of areas more strongly and in a more focused way than before. That means that the local authorities, with business and the wider community, should work together. I am arguing that local government has come a long way. It often takes the lead in regeneration and economic development and I am disappointed that the Opposition do not trust it. We should put more trust in it, given its track record and the enormous strides that it has made in economic development. Of course, the power is an enabling power. We are not saying that local government has to do anything and that is crucial to remember.

When the Opposition talk about a ballot, they are actually asking for a veto on these schemes for business, but the schemes do not just affect businesses—although businesses are being asked to contribute—but the wider community, too. I do not support a veto. I believe that what my right hon. Friend the Minister for Local Government said provides plenty of safeguards. Local government is vibrant and it has taken the lead in some difficult times. It is under additional pressures today, and I believe that it will do the right thing and work with business to bring forward the best possible schemes, which are sensible and logical, to help their areas.

Question put and agreed to.

Bill accordingly read the Third time and passed.