Consideration of Lords amendments
Before I comment on matters of privilege, I would like to say a few words. Deputy Speakers may not take part in debates and have to be silent during them, but I wish to abandon impartiality for a moment and say that Sylvia Heal, Sir Michael Lord and I entirely endorse the sentiments expressed in the previous motion and on so many sides of the House about Mr. Speaker. Words such as “humanity”, “kindness” and “generosity” are ones that we closely associate with Speaker Martin through our work with him over the years. We, too, wish him well.
I draw the House’s attention to the fact that privilege is involved in Lords amendments 1 to 8 and 10 to 14. If the House agrees to any of those amendments, I shall ensure that the appropriate entry is made in the Journal.
Power to impose a BRS
I beg to move, That this House disagrees with Lords amendment 1.
With this it will be convenient to discuss the following: Lords amendment 2 and Government motion to disagree.
Lords amendment 3 and Government motion to disagree.
Lords amendment 4 and Government motion to disagree.
Lords amendment 5 and Government motion to disagree.
Lords amendment 6 and Government motion to disagree.
Lords amendment 13 and Government motion to disagree.
Lords amendment 14 and Government motion to disagree, and Government amendment (a) in lieu.
The Bill was amended in the other place on Report, so a ballot is required before any business rate supplement can be levied or any existing business rate supplement can be varied. Due to amendments 8 and 9, which we will come on to, a ballot will not be required for the BRS that will form part of the Crossrail funding package.
The Government recognise that the BRS will not work unless there is a strong and effective partnership between the levying authority and local businesses. Throughout the passage of the Bill, we have made it clear that we expect levying authorities to engage with local businesses in the development of the BRS and to continue engaging with business once the project is under way.
To provide further reassurance on this point, we committed on Report to the statutory guidance making it clear that levying authorities must consider how they will engage with businesses over and above the statutory consultation. The appropriate approach to engagement, however, will depend on the nature of the project that BRS will be funding and the partnership arrangements that already exist between levying authorities and their local businesses. For that reason, we should leave levying authorities to work responsibly with their local businesses in developing BRS projects, rather than prescribing from Westminster how this should be done.
We should trust our local authorities. During the Public Bill Committee evidence sessions, Councillor Knight, speaking on behalf of the Local Government Association, said:
“The guarantee to local businesses that this power will not be abused is the guarantee that we are accountable to local communities. We have a direct interest in ensuring that local economies are maintained and sustained...No authority will make a decision that has a detrimental effect on its local business community.”––[Official Report, Business Rate Supplements Public Bill Committee, 20 January 2009; c. 65-75. Q250]
The Government’s position is that a ballot should be held in those cases where the supplement will fund more than one third of the estimated total cost of a project and it ensures that where businesses will be contributing a relatively large proportion of that project, they will have the power to vote on whether they make that contribution. If business votes against, the BRS will not happen. However, when businesses will contribute a smaller, although important, element towards the costs of a project, a judgment should be made locally on whether a ballot is appropriate. That is proportionate and reasonable, given that BRS revenues will contribute the lion’s share of a project’s funding in some cases, but a relatively small proportion in others.
Requiring a ballot, even in cases in which the supplement is funding a relatively small proportion of a project, potentially places undue emphasis on one aspect of a project. For example, a levying authority might propose to fund 10 per cent. of a project through a BRS. If the authority engaged with businesses at an early stage about the proposed project and business rate supplement and secured their support, and if that was then borne out through consultation, it would make no logical sense to require the authority to go through the process of holding a ballot.
It should be made clear that a ballot will not be a quick or cheap process. There should be no need for a ballot on a short-term business rate supplement that will fund a relatively small proportion of a project supported by business. The expense would be disproportionate, and in some cases simply could not be justified. That could result in a totally artificial discouragement to levying authorities to use BRSs in cases in which doing so would make a real and positive difference to an area.
I am interested in what the Minister is saying, but I am trying to reconcile the logic of her argument with that adopted by the former Minister for Local Government, the right hon. Member for Wentworth (John Healey) on Second Reading and in Committee. Later we shall deal with BRS-BIDs—I note that the right hon. Member for Greenwich and Woolwich (Mr. Raynsford) is present—and I am happy with the Lords amendments in question, but the earlier argument was that business improvement districts were by and large short-term projects, and that the BRS frequently related to longer-term projects. It is difficult to reconcile that argument with the Minister’s current argument.
I am merely giving a possible example. In the broad sense, obviously we expect the BRS to be much wider and to cover a much longer period. We are not necessarily talking about relative BIDs specific to a five-year period. We could be talking about a period of between five and 30 years.
The hon. Member for Bromley and Chislehurst (Robert Neill) may have slightly misrepresented the position taken by the then Minister, my right hon. Friend the Member for Wentworth (John Healey), who strongly advocated the policy that is implicit in the Bill as presented to and agreed by the House of Commons that there should be a ballot as long as expenditure is over 30 per cent., but that there should not be an automatic ballot in other circumstances which could, as my hon. Friend the Minister has rightly said, involve unnecessary expenditure for relatively limited benefit. The distinction between BIDs and the BRS is that the BRS is for much larger capital investment, and BIDs involve far more local schemes, which may well go on for a long time. They are not necessarily limited to five years, as the hon. Member for Bromley and Chislehurst suggested. They could last for 20 years as long as there was support for them.
As ever, my right hon. Friend’s considerable knowledge of local government shines through.
As Lord Davies made clear, even if there is no ballot, levying authorities will not have a free rein to use the BRS to fund their pet projects regardless of the views of local businesses. They will be required to consult businesses formally, and that consultation will be over and above any preparatory dialogue in which they engage.
I am grateful to the Minister for being so generous in giving way. What reassurance can she give business that such consultation will be any different from many other recent consultations, such as the one on post office closures? Is not the problem that, sadly, consultation has become a somewhat devalued concept and that people seek a greater safeguard? Would not a ballot constitute such a safeguard?
The hon. Gentleman can take comfort from the evidence given by organisations such as the Local Government Association. I think that the point was made then—it was certainly made in Committee by my right hon. Friend the Member for Wentworth—that we have moved on from the old-fashioned view that local authorities just wanted to get money out of businesses and were not prepared to consult them. I hope that the hon. Gentleman is confident, on the basis of the local authorities known to him, that authorities nowadays work in partnership with business and are committed to consultation of that kind.
Businesses have a guarantee that the BRS can be used only on additional projects that are aimed at promoting the economic development of the area. As such, BRSs are limited for use on additional projects that will be relevant to local businesses. Businesses also have a guarantee on the maximum level of the supplement with the national upper limit of 2p per pound of rateable value, and a guarantee that properties with a rateable value below £50,000 will be exempt from paying the supplement. It was right for us to include those safeguards. However, if a ballot is required in all cases, there will be a danger that financial institutions and funding partners will not be willing to commit funding when one element of the funding package is uncertain owing to the need for a ballot. That risks destabilising such funding packages, and makes the BRS a less attractive option for projects funded from multiple sources.
The Minister is being very generous. I hope that I shall not need to intervene again.
In the context of certainty, has the Minister seen a copy of the letter from the director general of the Confederation of British Industry dated 12 June and sent to her right hon. Friend the Secretary of State? The letter states that only mandatory ballots can give businesses the certainty that they desire. When will the Secretary of State respond to that letter?
I will ascertain from my right hon. Friend’s office when a response will be forthcoming, but I am sure that today’s debate will constitute an element of that response.
We do not want to limit the BRS as really only an attractive option for use as the sole funding mechanism for a project. That limits levying authorities in terms of the amount of revenue they can raise, and means that the BRS cannot be used in conjunction with other funding streams to fund larger, more ambitious projects aimed at promoting local economies.
The effect will be particularly pronounced outside London. Properties in the London typically have higher rateable values than those outside the capital. Under the current proposals, properties in England with a rateable value of £50,000 will be exempt from paying the BRS. That threshold will exclude a higher proportion of properties from paying the supplement outside London than in the capital, which means that outside London there is an increased likelihood that the BRS will form part of a wider funding package. Therefore, the difficulty created by the ballot in cases in which the supplement will form part of a wider funding package will be more pronounced outside the capital. That makes the BRS less attractive as a funding mechanism to promote economic development outside London.
In requiring a ballot in certain circumstances, the White Paper and the Bill go significantly further than either the Lyons review or the Communities and Local Government Committee. Both recommended that the decision to hold a ballot should be left to the levying authority.
For the reasons that I have just given, we do not think that a ballot should be required in all cases. We consider that it should be required only in cases in which the supplement will fund more than one third of the total projected costs. However, because Members in both Houses have expressed real concern that there should be genuine engagement of local businesses before a supplement is introduced, we propose that in cases in which a ballot is not required by virtue of the fact that the supplement is expected to fund less than one third of the total cost of the project, the authority should be required to set out the BRS prospectus whether or not it intends to hold a ballot, and—importantly—to explain why it proposes that course of action.
I want to make it absolutely clear that the Government do not consider that a ballot should always be held. The amendment requires authorities to state why they think a ballot should, or should not, be held. It does not ask them to justify their decision only if they decide not to hold a ballot; there is not, as such, a presumption of a ballot. For instance, the BRS might be used to fund a small proportion of a project over a short period such as six to 12 months. In such cases, the costs of running a ballot might be considered to be disproportionate, given the contribution that would be made by the supplement. If an authority wanted to hold a ballot in such cases, taxpayers, including local businesses, would justifiably be interested in its reasoning.
The amendment provides important transparency in the decision-making process relating to ballots. We think it right for levying authorities to have discretion on whether to hold a ballot when the supplement is expected to fund less than one third of the total cost of the project. However, we acknowledge that the decision-making process must be transparent to those who will ultimately be liable for the supplement. The amendment will give businesses confidence that the decision-making process on ballots will be made clear. It allows levying authorities flexibility to do the right thing by their communities while ensuring that local businesses understand why the authority has taken a particular course of action.
For those reasons, I invite this House to disagree with the Lords amendments, and commend the Government’s amendment in lieu to the House.
This is the first time that I have had the pleasure of doing business on local government issues with the Minister. As a member of a shadow team that has been in place a little longer than the Government team, I welcome her to her new post, and look forward to doing further business in the future.
I am sorry that we will have to start on a note of disagreement, but such is life. The Minister has set out much the same arguments in resisting the Lords amendments as Government spokesmen used in the other place. Their lordships were not convinced, and with every respect to the Minister’s persuasive skills, I have to say that I am not either.
The key issue is that if the BRS is to be successful, it has to have wholehearted buy-in from, and the consent of, the business community, otherwise it will not achieve the stated objectives. It is well known—I repeat this point merely for the record, without elaborating on it—that the official Opposition would not have introduced a BRS at this time in an economic cycle, in the midst of a recession; the only exception in our case was the Crossrail project. That point has been well rehearsed and well debated, but I mention it to set the context. At a time when businesses are under more pressure than ever, the introduction of BRS—and without a ballot—would in our judgment be an unjustified and unduly onerous imposition on them. Businesses are already struggling; they are finding cash flow ever more difficult, and the costs of borrowing money to meet cash flow and other requirements are ever higher.
It is also important to remember that their lordships rightly debated this change not in isolation, but in the context of BRS together with other potential burdens on businesses. If we add in the cumulative burdens of a revaluation of the standard, ordinary business rate, never mind the BRS, and the possibility of extra parking charges and other levies, we see that there is a danger of the straw breaking the camel’s back. That is why it seems to us that if there are to be BRS projects, it is only right and fair that businesses should have a chance to vote on that; otherwise, they will be caught in the invidious position of having a form of taxation without representation.
We will in due course move on to discuss amendments in relation to what are called joint BRS-BID levies. The only reason why I mention that at this stage is to own up to being a convert to BIDs. I was sceptical about them when they were first introduced, but I am now persuaded that they can be very successful. There is a key difference, however, in that for BIDs there is always a ballot of the businesses that are going to participate. That is an important lock in terms of both accountability and improving the scheme. That is not just the view of politicians. When the Bill was previously before this House, the Committee conducted some useful pre-legislative scrutiny evidence sessions. The evidence from the various business organisations was overwhelmingly to the effect that, whatever their views about introducing a BRS scheme at this stage in a recession, if there was to be added value it was crucial that there should be a mandatory ballot.
That point was made by a number of highly experienced Lords in the other place, and it has been reinforced by the CBI very recently. I previously asked the Minister about a letter from Richard Lambert, the director general of the CBI, to the new Secretary of State. In the context of the amendments, Richard Lambert states:
“You will not be surprised to hear that the CBI welcomes these changes. In 2007 the six hundred businesses that make up the CBI’s nine English regional councils agreed that CBI should support the principle of business rate supplements.”
They are not coming at that from a Conservative party political point of view; I disagree with them on that particular issue of principle. The letter goes on to state, however:
“They felt that if there is a need for new local infrastructure businesses should be able to contribute, where they see real value. However, there was overwhelming belief that this would only be acceptable if businesses had the safeguard of a mandatory ballot. This would ensure that supplements were affordable and only used for projects that would genuinely stimulate local economic activity.”
In relation to the Lords amendments that we are debating, the letter states:
“In its amended form the Bill provides far more certainty for businesses about their long-term rate liabilities, whilst still enabling local authorities and business to work together to fund and deliver new infrastructure projects. In the current recessionary climate such improved certainty is absolutely essential. Government now has a real opportunity to demonstrate its commitment to helping businesses by allowing the changes voted through in the House of Lords to remain a part of the Bill”.
I could not have put it any better. That is a persuasive case from the CBI, representing thousands of businesses, and it looks as if the Government are persistently turning a deaf ear to those arguments.
Certainty certainly relates to funding streams, but there must also be certainty for the businesses that are going to have to pay. The limit of 30 per cent. is in every respect an arbitrary one, because it is a question not just of the percentage that is funded, but of the amount that will fall to be paid by individual businesses. As has rightly been said, the nature of BRS schemes can vary. Some will be large, and some small, but as the Minister interestingly, and I suspect correctly, said, many involve significant capital expenditure. Even 20 per cent. of a very large scheme is a significant potential burden on businesses at a time when they can ill afford such cost burdens. That point appears to be missed.
I am sorry to have to say that the Government are also unwilling to seek greater business involvement. On Report in this House, there was a great deal of discussion about the possibility not only of having a safeguard for businesses through the mandatory ballot, but of mechanisms to ensure their greater participation in the development and ongoing oversight of BRS schemes. Ministers—previous Ministers, I hasten to add—uttered warm words about that. They said they would look at it, but nothing has emerged. I hope it may yet do so, but that does not give us much confidence that the Minister’s words about wanting to encourage participation between local government and business are actually going to be met with action.
That is a profoundly disappointing stance for the Government to take, so it is important to set in place greater certainty for business than the Lyons review set out, precisely because of the potential impacts on business. If a package had been developed that gave businesses greater safeguards, perhaps their lordships would have come to a different conclusion, but it has not been developed, and given the history of how this matter has been debated—we will come on to another piece of history in respect of a later group of amendments—I do not have confidence that warm words will be met with action.
Against that background, I am sorry to have to say that we have to maintain that the Government have misjudged the mood and misread the evidence, and that if they disagree with the Lords they will make the Bill worse than when it came back to this House from the other place. That will be a missed opportunity and a great let-down, and it will send precisely the wrong signals to businesses in this country at the current time.
It is a pleasure to follow the hon. Member for Bromley and Chislehurst (Robert Neill). He referred in his opening remarks to his longevity in his post in comparison with my hon. Friend the Minister, who has just assumed her post. I agree, and I wish him even greater longevity in his current post in opposition. He argued initially that my hon. Friend the Minister used the same arguments as the Government had used in the Lords and that the Lords had disagreed with those arguments, and he offered that as a reason for going along with the Lords’ position. What he failed to say was that the Minister deployed exactly the same arguments as her colleagues in the Commons did when this matter was debated here—and the Commons agreed with the Government, not the Opposition. Thus, we have a classic situation where the Commons has taken one view and the Lords has taken another, and I believe that the elected Chamber should prevail in those circumstances.
The Opposition argue that the business rate supplement is an inappropriate tax to introduce at this time, except in respect of Crossrail. We have heard before that classic illustration of the woolly thinking of the Opposition. If ever there was a scheme that involved a considerable imposition on the business community, it is Crossrail, which is a large and expensive—£16 billion—scheme. The BRS will make a significant contribution to that, albeit less than a third, and payments by business over many years will be involved. If the argument is that this is the wrong time for business to be making a contribution towards infrastructure investment, that argument certainly applies to Crossrail.
Of course, as the hon. Member for Bromley and Chislehurst knows perfectly well, business is supportive of Crossrail, rightly believing that the scheme is good for London, for Britain and for business, because it will create the circumstances that will enable economic growth to continue in London. That is why business is wholly supportive of Crossrail. Is it really credible to say that there are obvious benefits that business wants and welcomes from infrastructure investment, such as Crossrail, here in London, but that no such other investment that might be appropriate may be possible anywhere else in the country?
I thank the right hon. Gentleman for giving way with his customary courtesy. How does he reconcile the fact that the very same business organisations that support Crossrail also say that there should be a mandatory ballot anywhere else? It is because they know that Crossrail is a unique project that has been uniquely discussed among people in London.
I must say to the hon. Gentleman that there is a total inconsistency in arguing that Crossrail is a good thing and should be supported without a ballot—we must remember that the business community is saying that there should be no ballot on Crossrail, because it is a relatively small element in the total funding package—and that that logic can apply in London, but cannot apply anywhere else. There is no sound logical basis for that particular case.
The logic behind having the BRS to support major infrastructure lies in the economic development potential. That is why the Government have introduced this measure. It is clearly right that if local authorities believe there is a case for a BRS, be it here in London or elsewhere, they should discuss the options with the business community and proceed only where there is clear, strong evidence that there are clear and definitive economic benefits. That is what I would expect to happen. The extent to which the business community is supportive of Crossrail in London is, of course, very much the product of the discussion that has occurred involving London’s business organisations, such as London First. They have long campaigned for Crossrail and clearly take the view that it should be supported by a BRS. They recognise that far from improving prospects and certainty, a ballot could be very damaging.
The hon. Gentleman argued the case for certainty, but I put it to him that the one thing that would be utterly damaging to Crossrail would be to say, at this point in time, “Oh well, there has to be a ballot. We don’t know what its outcome will be.” That would lead to inevitable uncertainty about the funding of this hugely important project. He recognises that and business recognises that. That is why business is saying that in the case of Crossrail there should not be a ballot. It is not just business or people who recognise the importance of Crossrail who are saying that; the Conservative Mayor of London, Boris Johnson, is adamant that Crossrail should proceed with a BRS and without a ballot.
The hon. Gentleman will know very well that the Crossrail BRS levy will be in place for some 20 years. I think that Boris Johnson, however ambitious he may be—he probably has ambitions to take over the leadership of the Conservative party in this place—will certainly not be in place for more than 20 years as Mayor of London. There is no question of any other BRS case coming forward in London, because the Crossrail BRS will take in full the maximum amount that is eligible to be taken from BRS under the legislation. No wonder the Mayor is able to take that view in the case of Crossrail and London. The overriding logic is that what applies in the case of London should apply to other parts of the country.
I have argued about the issue of certainty. I agree entirely that certainty is important, but where the discussion is about a relatively small contribution towards a major project that is being supported much more substantially by other bodies, it would be perverse if an uncertainty about the outcome of a business ballot could jeopardise the prospect of that investment taking place. So the argument about certainty cuts the other way in cases in which there is only a small contribution from the business community through BRS and the project is being overwhelmingly funded by other sources. That is the reason for saying that if a relatively small contribution is involved, a ballot should be optional, rather than compulsory. There is no question of saying that there should not be a ballot—if the local authority believes that it is right to have a ballot, it should have the option to hold one—but it should not be obligatory. I believe that it is right to leave an element of discretion to local government in this respect.
We have heard a great deal from Opposition Members about giving more freedom to local government, but the hon. Gentleman is now trying to support the other place in imposing shackles on local government and not giving it the discretion in these circumstances to determine whether a ballot should apply. He may or may not recall—I certainly do—the evidence given to the Committee by Local Government Association witnesses. They said that there should be no ballots in any circumstances. I do not agree with that view, and I believe that those witnesses were wrong on that, but I just remind him about listening to local government and giving it appropriate discretion within reasonable bounds. I believe that the Bill does that, that this House was correct to support the Bill in its original form and that the Members of the other place were wrong to make their substitutions with their amendments, and I hope that this House will reject the Lords amendments.
I am experiencing déjà vu, albeit that some of the faces have changed; I, of course, welcome the new Minister. Unlike the hon. Member for Bromley and Chislehurst (Robert Neill), I have had the opportunity to do that, even if I have not done so formally, in Committee, where we have been discussing another measure that affects local government.
The Conservative party’s position, as set out by the hon. Gentleman, is that the BRS should be capable of being applied only in London for Crossrail. Throughout this debate, which is ongoing because a different conclusion was reached in another place, my party has said that it thinks that the BRS should be available to local authorities in other areas. However, given that these projects are likely to come forward as newer ideas and newer schemes that have not had the same amount of debate, and public and legislative scrutiny, as Crossrail, we feel that to give business confidence that its contribution is taken seriously a ballot is appropriate in all circumstances.
There are, thus, three positions on this matter—four if we take into account the position of the Local Government Association, as set out by my friend Councillor Knight, with whom I agree on all sorts of other issues. He does an excellent job as a local authority member on London, but I disagree with him on this occasion. Those four positions are: that there should be a ballot in no circumstances; that there should be no BRS beyond London and in respect of Crossrail; the Government’s position that the BRS should be available but that a ballot is not necessary in all circumstances; and the Liberal Democrats’ view, which has been agreed in another place, that a BRS is a useful tool and part of the package needed to move towards economic recovery in areas where infrastructure could play a big role in turning the economy round and that business would benefit from that, but that to demonstrate publicly that business supports a project, a ballot is necessary. I agree with the conclusion reached in the other place, and indeed my colleague and I put those arguments in Committee—and many hon. Members demonstrated their support on Report.
There are differences between the imposition of a further supplementary rate on business and the current situation in which businesses do not, in normal circumstances, get a say on the rate that is levied on them as a contribution to local services. We debated that in Committee at some length. We are asking for a further levy on business to fund specific proposals, and in those circumstances it is right to have a public debate—the consultation to which the Minister referred. It is clear from the information provided to us by representative organisations that the consultation is not felt to be enough—the matter should not end there.
We have discussed—and will again later—the BIDs system, which the right hon. Member for Greenwich and Woolwich (Mr. Raynsford) introduced in his time in government. All hon. Members have been impressed by its successes around the country. The evidence provided to us before our detailed consideration in Committee of the success of BIDs and the contribution they make to their communities was one of the best presentations I have seen. It is appropriate to have a ballot in all circumstances when a BID is proposed. Consultation will have taken place and local businesses will have given their agreement in principle, but a ballot is still crucial. Therefore, it is strange to argue that in the case of BRS, a ballot may be inappropriate in some circumstances.
In most BID cases—I cannot say all, because I am not sure of the precise figures—the BID levy is far and away the largest contributor to the BID project in the area. Voluntary contributions may be made by some property owners or the local authority, but the BID levy is the largest single part. Obviously, if the BRS is the largest single part of any scheme, there will be a ballot. That is the distinction. It is only in cases in which the BRS contribution is a relatively small part of the total that local authorities will have the discretion about whether to hold a ballot.
Clearly, that is the Government’s argument—that it is possible to have a threshold beyond which the impact on businesses is not sufficient to necessitate a ballot. I do not agree. We could get into an argument about the right point for that threshold, but—as we have argued throughout—a ballot sends a much stronger message to business that the public sector, local government and the private sector must all engage with projects that will make a positive contribution to the future of an area. It is a clear and established system, and business is used to the BID ballot. It is much more simple and straightforward to say that a ballot would be held in all circumstances. For that reason, I am pleased that the other place accepted this amendment and I hope that this House, having considered the arguments expressed in Committee, which were ably supplemented in the other place, will accept that it got this wrong last time. We need to revisit this issue, and I hope that the Government will be slightly more flexible and agree that this scheme, which could make a real difference to communities around the country, should go forward on the basis of a ballot in all circumstances.
I thank the hon. Members who have contributed to this debate. I am sure that the hon. Members for Bromley and Chislehurst (Robert Neill) and for North Cornwall (Dan Rogerson) will not be surprised to hear that they have not managed to persuade me with their arguments.
The amendment concerns a discretionary power to be used by levying authorities of the business rate supplement, and levying authorities will be required to carry out a cost-benefit analysis of any proposals and to demonstrate the relationship between the costs and the benefits. We have already made the commitment that the statutory guidance will make clear the importance of levying authorities involving business in the development and throughout the course of the project.
The crux of the argument is whether it is right that business should have a veto on a project for which it is paying only a small percentage of the cost, but which has the support of the local authority and of others who are not in large businesses but will benefit from the project. That is the heart of the issue.
The amendment in lieu goes a little further, and would allow levying authorities the flexibility to do the right thing. It would also enable local businesses to understand why a local authority has chosen to hold a ballot when not required to do so—because of the 33 per cent. limit—or chosen not to do so.
I was a little confused by the contribution from the hon. Member for North Cornwall, especially his disagreement with Councillor Knight, who gave evidence on behalf of the LGA. The LGA’s position was that there should be no ballot under any circumstances, and that the guarantee to local businesses that the power will not be abused is accountability to local communities. I thought that that was the Liberal Democrats’ position and that they wanted to devolve decision making to local communities. It must be very confusing for voters when they hear one thing espoused in the House of Commons and a completely different view—
We want to see far greater tax-raising powers devolved to the local level, but this issue involves a specific levy on business rate payers, and in those circumstances there should be a ballot. It is essentially a democratic measure, which we support at whatever level.
Nevertheless, the fact remains that the hon. Gentleman takes a totally different view from a fellow Liberal Democrat. Indeed, the LGA does not stop at not wanting a ballot. It also wants to raise the limit to 4p and for local authorities to have a free hand to decide what to spend the money on. The Select Committee also said that we should leave ballots to the discretion of local authorities.
The amendment in lieu creates the right balance. It would require a ballot if the contribution were more than 33.3 per cent., and introduce the additional safeguard that the local authority will have to set out in the prospectus its reasons to hold, or not hold, a ballot.
Question put, That this House disagrees with Lords amendment 1.
Lords amendment 1 disagreed to.
Lords amendments 2 to 6 disagreed to.
Interaction with BID levy
With this it will be convenient to discuss Lords amendments 10 and 15.
The amendments in this group were Government amendments, tabled in the other place. They relate to property owners in business improvement districts in areas where a business rate supplement is in place. The amendments arose as a result of debates very early on in the life of the Bill, and I hope that hon. Members will find it useful if I take a step back for a moment and recap on how the amendments emerged. That will help to provide some context, so that hon. Members can see the rationale for the approach taken in the amendments.
One of the things that struck me as I familiarised myself with the issues raised by the Bill is the genuine cross-party support for business improvement districts, and that has been reinforced this afternoon. There was real concern that the introduction of the BRS might have a negative effect on the future viability of BIDs. I understand that one of the main concerns of BID practitioners and business supporters of BIDs is that if BID levy payers face a BRS on top of any existing levy, rate payers may be inclined to vote against BID proposals when they come up for renewal. That is a particular issue in London, where, I gather, 14 of the 20 existing BIDs will come up for renewal ballots by 2012.
As a way of addressing those concerns, my right hon. Friend the Member for Greenwich and Woolwich (Mr. Raynsford), whose expertise on such matters is legendary, tabled amendments in Committee and on Report to give property owners more of a say in BIDs and to enable the contributions to a BID to be spread between occupiers and owners. That could act as an effective offset for occupiers against their BRS liability. Although those amendments were withdrawn, they provided the opportunity for the House to have a meaningful debate on the issue, and the previous Minister for Local Government, my right hon. Friend the Member for Wentworth (John Healey), agreed to discuss the matter further with interested parties. Baroness Valentine tabled amendments on the same issue in Grand Committee in the other place on 18 May. The purpose of those amendments was to enable BID proposers or companies to decide whether property owners should be involved in, and have a chance to vote on, BID proposals for an area.
The amendments moved by the Government in the House of Lords on Report addressed the same broad issues as the amendments tabled by my right hon. Friend the Member for Greenwich and Woolwich and Baroness Valentine. The amendments that we are considering make arrangements for a new type of BID, to be known as a BRS-BID. It has that acronym to distinguish it from the current BID arrangements. That new type of BID could be established in areas where both a BID and BRS exist, and would allow for the owners of property to be involved in BID arrangements. It will be for those proposing BIDs, or existing BID companies, to decide whether they wish to involve property owners in their BID arrangements. Where they wish to, they can, but it will not be compulsory to do so.
The amendments enable revenues from property owners to be used as additional income for a BID project, or to be used to offset the contributions of those rate payers who are liable for both the BID levy and the BRS. The amendments also offer flexibility; the revenue stream from property owners could be used to fund a different project, quite separate from the BID project. Where BID companies or those proposing BIDs elect to involve property owners, there must be a ballot of those potentially liable for the levy. It will not be possible for a BRS-BID to be established unless there has been a successful ballot on the proposals. That mirrors the current arrangements for BIDs.
In crafting the amendments, we have taken on board many of the views expressed both in this House and the other place, and the views expressed by those with an intimate knowledge of the existing BID system. However, property owner involvement in BIDs is new territory, and it raises a number of complex and detailed issues that will need to be resolved before BRS-BIDs can come into being. The new schedule 2 contains a number of powers that will allow the Government to include the detail on the BRS-BIDs in secondary legislation. The regulations will deal with issues such as who should be considered a property owner, how the rateable value of non-domestic properties should be attributed to property owners for the purposes of the double-lock ballot, and the detailed arrangements for ballots. We will consult on the detailed arrangements needed to enable BRS-BIDs to be put in place.
One concern that was raised yesterday in the other place was about the impact that the amendments could have on billing authorities, which will play a key part in BRS-BIDs. I can reassure the House that the consultation that we will carry out will be accompanied by an impact assessment, which will address the potential impacts on different sectors, including billing authorities. The consultation will give stakeholders the opportunity to make their views known, including on the impact assessment, and we will consider carefully all responses before finalising the regulations that are needed before BRS-BIDs can come into operation.
I should clarify one specific point. I have already said that the amendments can apply only in those areas where a BRS is in place. There has been a debate in the other place about whether it would be possible to extend the provisions to BIDs in all areas. I understand the argument that, if these amendments are good enough for BRS areas, they should be good enough for areas where a BRS is not in place. It may be helpful if I clarify the position.
We have pursued the matter with the House authorities, who have confirmed that it would not be possible to include amendments to the Bill to deal with the inclusion of property owners in BIDs outside a BRS area. The issue centres on whether an amendment would be relevant. The Bill has a single purpose, which is to introduce the BRS scheme. The Bill refers to BIDs, but only to the extent that they are affected by the introduction of BRS. However, any stand-alone amendments to the BIDs regime, unconnected to the introduction of BRS, would not be considered relevant.
The principle behind the amendments was warmly welcomed by the other place and was widely supported by the House during the earlier stages of the Bill. The Government listened to the representations that were made, both from within Parliament and from outside, and agreed with them. That is why we introduced the provisions in the other place. Taking that into account, and with the explanation that I have given, I invite the House to agree to the amendments.
I am glad to say that on this occasion, there is a degree of consensus. As those who served on the Bill Committee know, the Opposition parties were very interested in the proposal from the right hon. Member for Greenwich and Woolwich (Mr. Raynsford), and I am delighted to see that it has broadly appeared in the amendments. That is progress.
The Minister is right to say that some detail may yet need to be bottomed out, but the concept seems to deal with a potential anomaly. I wish the Government had been persuaded of the fact that the benefits of BIDs, which I endorse, include a ballot in all cases. It is ironic that this set of amendments includes a compulsory ballot. I wish that were a general application. It is a step in the right direction.
I hope that when the Minister replies, she may be able to tell us the time frame for the consultation and how we can ensure the maximum ability to make changes in the regulations that will set out the guidelines, and so on. I am conscious that although their lordships welcomed the proposals, they expressed some concern about the size and complexity of very late amendments to the Bill. That is no fault of the right hon. Gentleman, who has been a proponent of BIDs, but it made for some interesting overnight reading of the Official Report of the other place.
I hope the Minister will take on board the comment that if we are to get it right, we must have the ability to revisit matters of detail that may not yet have been completed. I welcome the overall attempt to plug what might otherwise have been a weakness in the legislation. We support the amendments.
I now have to announce the result of a Division deferred from a previous day. On the motion relating to external service, the Ayes were 305 and the Noes were 160, so the Question was agreed to.
[The Division list is published at the end of today’s debates.]
I congratulate the Government on agreeing in another place this series of amendments, which provide a satisfactory and elegant solution to a real problem, which was the potential adverse impact of BRS on BIDs in areas where BIDs are in existence or due to be brought into existence in the foreseeable future, and where a ballot could well have been lost because those paying the BRS levy might have decided that it would not be fair for them also to have to pay an additional levy to support the BID.
I shall not go over the history. My hon. Friend the Minister explained that it was a subject of considerable debate in the House earlier this year when we first considered the Bill. The amendment introduced in the Lords goes further than the one that I moved, and I welcome the way in which that has been improved. Specifically, it tackles the issue of areas where BIDs are proposed but not yet in existence, whereas my amendment was limited to areas where BIDs were in existence. I recognise that that was a defect, which the hon. Member for North Cornwall (Dan Rogerson) highlighted in the debate in the House.
I acknowledged that at the time so I am delighted that the Government have found a formulation that allows the new provision to cover areas where BIDs are proposed but not yet in existence. It also includes provision to reassure tenants that the owner levy will not be passed on to them through rent. Again, that was a cause of some concern among BID levy payers—that the landowner would try to pass on the full cost of the landowner levy.
The Government have addressed the issue in a manner that has improved the amendment, which we debated a while ago in this House, and I very much welcome what is now in the Bill. I add one caveat only, on an issue to which my hon. Friend the Minister referred: the need at some stage to consider extending the provision to cover those areas where there is not a BRS, but where BIDs exist. The principle of landowners contributing to BIDs has been an issue since BIDs were introduced in the early years of this century. We had a debate at the time, and some parties strongly advocated the adoption of the American system, whereby the property owner rather than the tenant pays the levy. I, as the then Minister, believed that creating the register of landowners would have caused substantial upheaval and set back the process, and could have resulted in many abortive costs arising in areas where the register had to be compiled despite there being no proposal for a BID.
Given those circumstances, it seems sensible to proceed on the basis of the existing rating system in this country, where the tenant pays the business rate but owners are encouraged to make voluntary contributions. Some have but others have not, and there is a natural worry about freeloading, whereby substantial property owners in a particular area get the benefit of improvements that a BID brings but do not contribute towards it. The issue still exists, and, although I fully understand my hon. Friend’s reasons why, within the remit of the Bill, it was not possible to extend the provision before us to other BID areas, the problem will need to be considered again. I hope that the Government will, in due course, find a suitable legislative vehicle to allow the same formulation to be applied more generally to all BIDs. With that one caveat, I greatly welcome the amendment. It has made an important improvement to the legislation, and it will enable BIDs to continue successfully in many areas where they have made a big impact and whose existence might otherwise be threatened by the introduction of BRS.
It is a pleasure to follow the right hon. Member for Greenwich and Woolwich (Mr. Raynsford). He has pursued the issue keenly throughout the Bill’s passage through both Houses, and there is an element of unfinished business in it for him, given that he presided over the introduction of BIDs and, along with many others, has been an advocate of them during our deliberations. He was keen to ensure that the proposed changes—the involvement of a BRS system, too—would have a positive rather than negative impact on BID areas, because there was a danger of conflict between the two systems.
The previous two contributors discussed anomalies and particular situations, and, as the right hon. Gentleman said, we are not quite there yet. It would have been good to tidy up the situation in which a BRS is not imposed, but, despite his attempts in Committee to do all sorts of things, such as amend the title of the Bill, which was necessary at the time, it has not quite been possible to resolve that particular situation.
I also note that the right hon. Gentleman was slightly more supportive of the work that their lordships put into this element of the Bill than he was of their work on the previous one, but I leave that to the House to decide. The House has obviously had the opportunity to vote again on the issue, but I merely note in passing how I think that they were right on the previous issue and right on this one.
I am pleased to see that the hon. Member for Bromley and Chislehurst (Robert Neill), in his usual friendly and positive way, seeks to contribute to resolving the issue before us, although it presents him with a slight challenge, given that he is technically approving the imposition of BRS in other parts of the country but his party has said that it does not do so. With that comment set aside, however, we can all support the fact that the provision presents a solution—albeit slightly inelegant—to a problem and takes us further forward. We will all be watching keenly to see how BID areas make progress and, I hope, do even more to benefit their local communities and the business communities within them.
I just want to respond quickly to the hon. Member for Bromley and Chislehurst (Robert Neill), who asked when we would consult on regulations. As I explained, these are complex issues but we hope to begin consultation in the autumn. I thank the hon. Gentleman and the hon. Member for North Cornwall (Dan Rogerson) for their support.
Lords amendment 7 agreed to, with Commons privileges waived.
Special introductory provision
With this it will be convenient to discuss Lords amendment 9.
These amendments were brought forward and accepted by the other place to exempt, in all circumstances, the Greater London authority’s proposed BRS for the Crossrail project from the requirement for a ballot. The amendment originally accepted by the other place in its Grand Committee was tabled by Baroness Valentine. In response to the amendment, Baroness Andrews said, on behalf of the Government:
“I have listened to the repeated calls in your Lordships’ House and during the passage of the Bill in another place for an exemption for Crossrail. I certainly agree with the argument that it brings major benefits across the capital, commands wide support, and is already underpinned by an Act of Parliament. Therefore, with the agreement of the Committee, I would like to accept the noble Baroness’s Amendment”—[Official Report, House of Lords, 18 May 2009; Vol. 710, c. GC532.]
On Report, the Government tabled further amendments to adjust the original one; essentially, they were technical amendments to bring the new provisions into line with the rest of the Bill and remove the scope for legal uncertainty. The amendments achieved the objective accepted at the Grand Committee. At the same time, the Government also took the opportunity to extend the exemption from the ballot requirement for the proposed Crossrail BRS to cover the additionality requirement in clause 3 of the Bill, rather than leaving that provision to be made later on in regulations, as the Government had indicated was their intention. Amendment 8 therefore exempts the GLA’s proposed BRS for Crossrail from the requirement for a ballot and the need to meet the additionality test in the Bill.
The Government’s amendments were unanimously supported by all sides in the other place. The amendments provide important protection to the progress of the Crossrail project and crystallise the position on ballots for the BRS that will make up an important element of the Crossrail funding package and enable the Government to clarify the position on additionality earlier than would have been the case had the exemption been set out in regulations. For all those reasons, I invite the House to agree to the amendments.
This is one issue on which there was unanimity during our previous considerations; everybody wanted to make it clear that they supported Crossrail and the BRS as part of a settled package for the Crossrail funding mechanism. The amendments remove an ambiguity that none of us wants, so one need not say much more about the matter, save that we support the amendments.
I echo the comments just made by the hon. Member for Bromley and Chislehurst (Robert Neill). During the passage of the Bill, different parties sought in different ways to propose amendments, to highlight the fact that we felt that Crossrail was a scheme of a particular nature and that it had had a great deal of attention in the past. The debate on ballots and so on should not apply to Crossrail in the same way, and the distinction is helpful. I remain sad, of course, that the House did not vote to retain the amendments in another place about ballots more generally, but I am happy to accept these amendments.
Lords amendment 8 agreed to, with Commons privileges waived.
Lords amendments 9 and 10 agreed to, one with Commons privileges waived.
With this it will be convenient to discuss Lords amendment 12, and Government motion to disagree.
As right hon. and hon. Members are aware, Lords amendments 11 and 12 are intended to prevent the BRS from being levied retrospectively as a result of a change in the rating list.
Before I move on to the substance of the amendments and the background to them, I want to emphasise some key points about the Bill and what it provides for. The first BRS cannot be levied until 1 April 2010; nobody can have any liability for a BRS in respect of any day earlier than that; while we know that the Greater London authority intends to levy a BRS for the Crossrail project, as was discussed in the other place, other levying authorities do not have plans to levy a BRS but have welcomed the power to do so in the future; the £50,000 rateable value threshold for liability to a BRS in England will exclude most small businesses; while the Bill builds on the rating system, which I will come to, it does not change anything about the general rating system or have any affect on liability for non-domestic rates, whether before or after 1 April 2010; the BRS will be raised and retained locally, for projects which the levying authority, working in partnership with business, considers will promote the economic development of its area; and no BRS revenues will be coming to central Government, nor can they be used by the levying authority to support existing expenditure, as BRS can only be levied to support new, additional, spending.
The BRS builds on the non-domestic rating system. In particular, liability to BRS and the level of liability in respect of any given property will be based on the rating list entry for that property. Rating lists can be changed by valuation officers to ensure accuracy and, with that, the accuracy of rates liability. Sometimes this can lead to backdated increases in rates liability; sometimes it can lead to backdated decreases and, therefore, refunds. There is the possibility of backdated increases in rateable value causing higher BRS bills than businesses were anticipating, but the practicalities involved in ascertaining the need for changes to a rating list and then establishing what change is required mean that backdating is an essential part of the normal functioning of the system.
Right hon. and hon. Members know that, over recent months, the issue of backdated rates liability has been highlighted by the situation in a number of ports. However, the Bill relates to the BRS, and the amendments would not affect the situation in ports. As was emphasised by Lord Davies in another place, the issue of ports does not affect the principle. It would be unfair to those businesses that have been paying the correct BRS if others were paying a smaller bill simply because an inaccuracy on the rating list meant that they were not asked to pay the correct supplement. It is also worth reiterating that BRS bills, like rates bills, can go down as a result of a change to the rating list in certain circumstances; that is a normal function of the system.
This is the same standard argument that has been given to us during our lengthy discussions on the Bill—that there is no possibility of not giving retrospective assessment because everybody else would want it and it would break a fundamental principle. However, regulation 14(6) of the Non-Domestic Rating (Alteration of Lists and Appeals) (England) Regulations 2005 provides that where reassessment is the responsibility of the Valuation Office Agency, not the result of a mistake or a fiddle on the part of the hereditament owner, there is no need for a retrospective revaluation. If that principle had been adopted under the Bill, as it should have been, we could have avoided all this trouble. What my hon. Friend is saying is wrong in respect of assessments such as those in the ports, which were done as the responsibility of the VOA, not the hereditament owner.
I appreciate the point that my hon. Friend is making. However, the special provision in regulation 14(6) does not apply where a property is missed off the list altogether on the day that it is compiled, as there is a difference between a ratepayer paying rates where the rateable value has been incorrectly assessed by the VOA and a ratepayer not paying rates on a property at all.
That surely cannot be true, because the principle of individual assessment began in 2005 when, the VOA tells us, it assessed the rateable value of each port operator on the advice that it got from the port owner. There was already a rating, and indeed the operators were paying rates through the cumulo rental system.
I have to beg to disagree with my hon. Friend, because the individual properties were not on the list on the relevant date in 2005. That is why regulation 14(6) does not apply.
Backdating rating assessments is not new but an established feature of the business rates system. It operated in the case of the list that we are considering not only from 2005 onwards but from 2000 and before.
I apologise for intervening, but I have to be in Westminster Hall for an Adjournment debate shortly. Does my hon. Friend not appreciate that the crux of the argument, and the reason the move has caused so much anger in certain port areas, is that businesses had already paid their rates to the operators in the cumulo system? The problem is not that they have not paid. It is that they have already paid, and they are being asked to pay double taxation.
I thank my hon. Friend for her intervention. We are moving off business rate supplements slightly, but I shall respond to her point. In the cases that we have examined, it is difficult to prove contractually that that has been the case. If she knows of specific instances that she can show us, I invite her to do that so that we can examine them. However, the arrangement is a contractual obligation between the port operator and port businesses. It is difficult to disentangle the figures, and the only example that we have been given is very unclear.
Order. May I say to the hon. Gentleman that we are getting rather sidetracked away from the amendment that we are discussing? We now ought to come back to the amendment that the House is examining.
Thank you, Mr. Deputy Speaker.
On Lords amendments 11 and 12, I commend the quality of the debate in the other place. Forceful arguments were made as to why backdated rating list changes should not apply in relation to BRS liability. Lord Bates set out his view that the amendments
“are designed to provide an important guarantee to avoid retrospection in business rate supplements taxation”.—[Official Report, House of Lords, 9 June 2009; Vol. 711, c. 550.]
He felt strongly about that matter. The noble Lords Tope, Williamson and Brooke and Earl Attlee and Earl Cathcart all spoke eloquently and persuasively in his support. However, I reiterate that the Bill relates to the BRS. For the reasons that I have already mentioned, which were set out by Lord Davies in another place, I do not agree with the principle of the guarantee described by Lord Bates.
It is right and fair that the system that applies to rating should apply to the BRS. Maintaining an accurate rating list necessarily involves an element of backdating, as properties must be valued when they are complete or nearly complete to ensure proper valuation. We cannot have a system in which a person avoids paying rates or the BRS for a time, whereas someone else in analogous circumstances cannot, because of the coincidence of when a valuation can be undertaken in practice. That would be unfair and irresponsible, so it is right that changes to rating lists take effect from the date of the event giving rise to the change. The provisions in the Bill were crafted to be entirely consistent with the national business rate system. That ensures that liability to business rate supplements will be fair to all.
I am grateful. My hon. Friend says that it would be unfair if retrospective rates were not levied. To whom would it be unfair? A whole new class of businesses, the port operators, is being brought into the business rate separate assessment system. As my hon. Friend the Member for Cleethorpes (Shona McIsaac) has pointed out, they were already paying business rates through the cumulo system, and now they are going to be rateable under a different system. That should have been done in 2005, and the VOA says that it was. Why were the valuations reassessed in 2008 and made retrospective? To whom would not doing so be unfair?
I do not want to dwell on the specific issue of ports, and I am sure that there will be opportunities to debate it at other times. We are considering the principle of backdating in the business rating and valuation system, and the dates on which it comes into effect. The principle is that changes to rating lists take effect from the date of the event giving rise to the change. We therefore propose that the House reject Lords amendments 11 and 12 in order to reinstate the right and fair position of consistency with the business rate system generally.
I can only reiterate that the amendments that we are debating will have no effect on the current position in the ports. I am sure that there will be ample opportunity on other occasions to discuss and debate that further.
Having explained why we cannot agree to the amendments, I must remind hon. Members that the Speaker has designated the amendments involving privilege. If hon. Members vote to overturn amendments 11 and 12, the reason for the disagreement must, in accordance with the House’s practice, involve privilege. That is in no way intended to criticise the quality of debate on those matters in the other place. I have commended that, and do so again now.
I hope that I have tackled the issues that were raised and demonstrated why I disagree with the amendments on principle. I hope that the House will reject amendments 11 and 12.
I have some sympathy for the Under-Secretary—up to a point. The only reason for having any sympathy for her is that she did not start the ludicrous matter, and she is the umpteenth Minister to walk into it. However, I regret to say that those who drafted her response and produced one of the most mealy-mouthed, legalistic and technocratic excuses I have ever heard in the Chamber served her ill. The Government are shamed by their attitude. I was not surprised that the Government Whip was anxious to ensure that the debate was kept carefully away from the constituency issue that a Labour Back Bencher tried to raise. The Government are worried because they have been crucified in every debate on the matter. They have no answer, and the Under-Secretary is stuck in that position.
There is a matter of principle and the issue is important because, as the Under-Secretary said, the normal business rating system must apply to business rate supplements. I do not disagree with that—it is perfectly logical. My noble Friend Lord Bates tabled the amendment because the safeguards against potential injustice in the normal business rating system are shown not always to work adequately. The ports issue is therefore germane, and there was a full debate on it in the other place. It is an example of how injustice can occur in the current circumstances and of the inadequate remedies that exist to resolve it. We therefore thought that it was right to make provision in primary legislation to ensure that such injustice is not imported into the regime under Bill. That is an important principle.
The amendment that Lord Bates tabled would ensure that there is no retrospection when the BRS payer has committed no fault. That is a key issue, which should apply across the board. An injustice has been done to taxpayers in the ports through no fault of theirs, but through the incompetence of the Valuation Office Agency in not updating the list in a timely manner, not giving proper notice, not ensuring proper consultation and not providing an impact assessment. The Bill could permit an injustice to happen in the BRS model, too. The amendment was tabled to try to prevent that.
I am grateful to the hon. Gentleman for his support on the matter. If we were to try to summarise the Government’s position, does he agree that they seem to be saying that they cannot change the overall system just because there are problems in the ports, so they will reject the amendment and treat other people equally unfairly at some point in future?
I am afraid that the hon. Gentleman puts the case very well. I wish that we had a specific legislative peg on which to hang the issue of ports. Given that we cannot do that, we can at least ensure that no such injustice is done elsewhere. In theory, there could be a BRS scheme in the port areas—on Humberside or in Liverpool—and I would not want the same injustice to occur.
I apologise for missing the opening speeches. As I understand it, the hon. Gentleman is going to support Lords amendment 11. I commend him for that, because on this issue we have had huge difficulties in getting the official Opposition off the fence. For them to do so must now show that there is something of value at stake.
I know that the right hon. Gentleman is in a difficult situation, as candidates for anything sometimes are, but with every respect to him, he will know perfectly well—I mean this in a good-natured way—that we did not vote against a previous measure because it would have removed a measure of protection. Those of us who genuinely feel that the Government have been led into error now have an opportunity to agree on some common ground. I stress that the problem did not start as the fault of a Minister; it started with the incompetence of the Valuation Office Agency. Frankly, it is the people in the VOA who should ultimately be held to account, but I am afraid that it might be too late by the time someone is in a position to do so.
My hon. Friend is making his speech in his usual highly articulate way, but he is being too kind to the Government, although not to the Minister. The problem is certainly not her fault: she is new. Is it not the case that, having paid a rebate to the port employers, the Department’s Treasury colleagues are now saying, “You cannot let these port rating people”—the unfortunate small businesses in ports, many of which are competing with their landlords—“off the hook”?
My hon. Friend is absolutely right. That is why it is so important to entrench the proposal, to prevent further injustice in future. Frankly, the Government are being duplicitous in the way that the system is being organised. People are being squeezed, and we have had a Pontius Pilate-like attitude from successive Ministers, who come along, wring their hands and say, “This is all very sad, but that’s the normal system and there’s really nothing we can do about it. We’d like to, but I’m sorry, we can’t help.” At the same time, businesses are already going under and jobs are being lost. However, nobody in the Department seems to grasp the fact that the proposed remedy of the eight-year payment period, which in theory could, I suppose, be imported if injustice occurred in respect of the BRS, does not get round the problem that the debt has to be booked in the first year, which means that companies become balance-sheet insolvent by a substantial sum. That affects their ability to raise finance and the cost of finance, and puts them in genuine difficultly.
The right hon. Gentleman is characteristically perceptive and well informed, and he is right. I am sorry if I am being less combative than I sometimes am—I thought that I was being reasonably vigorous—but we regard Lords amendment 11 as so important because of a desire to prevent a great injustice and because the feeling is so strong. The Government’s deafness is such that it makes those on the Guardian Council in Tehran look like flexible and open-minded people. People are shouting and hollering to try to bring an injustice to the Government’s attention, and the Government just say, “Sorry, nothing to do with us.” At the end of the day, that is just unfair.
That is why it is right that Lords amendment 11 should be maintained. It is also why the amendment was passed in the other place not by a small margin, but by a majority of 60. In terms of votes in the other place, that is a very significant margin indeed. It is interesting that the record of proceedings and votes in the other place shows that a number of Labour peers who supported other aspects of the Bill felt unable to vote in the Lobby against Lords amendment 11. They knew that justice was on the side of the amendment. I wish that that message would get through to the Government down here.
I am grateful to my hon. Friend for giving way, particularly now that he is getting into his stride and is in his normal, more combative form. We must put on record the sheer unfairness of the situation. If one of the tenants goes bust, as some already have, the port owners, many of whom are in direct competition with their tenants, do not then have to pick up an empty property rates bill. It is unbelievable.
It is a most perverse situation. Ministers in the Department for Communities and Local Government do not seem to be able to grasp the fact that landlords can also be competitors, and that that creates a perverse incentive. The Minister referred to this as basic rating finance under the normal system. Well, if this is the normal system, it is wrong, and we need to ensure that it is not rolled out into other areas as an extension of the rating system. My hon. Friend is right, as he always is on these matters.
It cannot be right that people who might be subject to a BRS should be liable to the same injustice that has been identified in relation to a number of firms in Humberside. An example is Freshney Cargo Services Ltd, which has had a 1,700 per cent. increase in its rateable value. It is now going to have to pay bills backdated a number of years that are significantly more than its annual turnover, never mind its profits. It is really going to struggle.
This is happening to honest, reputable firms that would pay a BRS honestly if the situation arose, and that pay their rates honestly. They have not misled anyone, and they are not responsible for any fault or concealment, yet they are being penalised. The kind of redress that they are being given—which might be offered under a BRS scheme, I suppose—is wholly inadequate, because it leaves them potentially balance sheet insolvent and with real burdens placed on them. These firms are important. The one that I have mentioned employs about 40 staff directly, and has about 100 people dependent on it.
It is ironic that the Bill is being presented as a means of improving economic regeneration and business activity. It is also ironic that responsibility for the Bill lies not only with the Under-Secretary of State for Communities and Local Government, the hon. Member for Portsmouth, North (Sarah McCarthy-Fry) but with the Minister for Regional Economic Development and Co-ordination whose double-hatted job involves her working not only in the Department for Communities and Local Government but in the Department for Business, Innovation and Skills. It is extraordinary that a lady who is responsible for economic development should be presiding over a Bill that will shut down businesses. As we do not seem to be getting much response from her boss in the Department for Communities and Local Government, I would have hoped that her other boss, in the Department for Business, Innovation and Skills, might have come up with an alternative solution. This is simply not joined-up government. It is ironic that that same Minister is presiding over a measure that is going to put firms out of business. That just does not make sense, and to refuse to listen to the very reasoned debate in their lordships’ House potentially extends the anomaly and injustice elsewhere.
With respect, the suggestion that the amendment would set a dangerous precedent is wrong. A fair point has been made about the unique cumulo system in relation to ports rating. There is no danger of unscrambling the whole system. To include the risk of further injustice in the business rates system is just wrong.
Lest people think that this is a fanciful situation, let me tell the House that if all local authorities were to implement BRS schemes, it would raise considerable sums of money. However, great damage is being done by backdating purely in relation to ports. In the port of Hull alone, the sector is being clobbered by a bill for something like £25 million. In Liverpool, the figure is £22 million; in Immingham, it is £19 million; and in Cardiff, it is £1.6 million. No wonder those areas feel that the Government are letting them down. I feel sorry for the Labour Back Benchers who have tried to raise this issue and been thoroughly brushed off by their own Ministers. That is pretty shabby treatment.
May I stress again that people do not have to come to British ports? There is nothing to prevent them from unloading their containers in Rotterdam or in any other continental port and putting them straight on to a lorry that will come in through Dover or the channel tunnel. That is what will happen.
My hon. Friend takes a particular interest in transport matters, and he is absolutely right.
The Bill comes at a time when ports are already under pressure from the fall in freight rates. Businesses are therefore already being heavily squeezed. Business in the ports on what are sometimes called the near sea routes is particularly threatened because major concerns such as DFDS Seaways have indicated that, unless there is a change to these measures, they will reconsider their significant investment in the UK. That would be a massive blow to economies, including to the partnership between local authorities and business in areas that are trying to regenerate. It is entirely plausible that operations would be moved to Rotterdam or Antwerp and the goods simply brought in by road thereafter. The transhipments would happen elsewhere. That would ironically benefit local authorities and businesses in continental Europe and significantly damage businesses and the local authorities that work with them in our port towns.
That is why this issue is so important and why we make no apology for returning to it again and again. It is also, I suspect, why the amendment was so closely and well argued in the other place and carried by such a large majority. I thus genuinely appeal to the Minister at this late stage in the game to rip up her departmental brief, stand back and look at the issue as a matter of fairness and justice. Compared with the sums of money pumped out into some sectors, scrapping the unfair retrospective element would be nothing at all and it would help to create the degree of certainty that was mentioned in our debate on earlier amendments. The Minister should do that to provide a proper basis for the partnership working between local authorities and business that she identified as central to the Bill.
Let me end on a final irony. A number of local authorities want to be sympathetic and have tried to hold back from collecting the business rate that they are obliged to collect, but they are now being pressured by the same Government to start enforcement and start collecting. I know that some deals are being done, but that is a drop in the ocean, as the vast majority of people are going to be hit with liabilities that they cannot reasonably meet. That will positively harm the exact premise of the Bill—local authorities and businesses working together to regenerate their areas. I ask the Minister, who is up to now untarnished by this whole unhappy saga, not to listen to the official line, but to apply basic common sense and justice and support the Lords amendment. She should go to the Chancellor, who may have the strength of flexibility and independence, and ask for justice to be done.
I support Lords amendments 11 and 12. It is unusual to find myself in such agreement with the hon. Member for Bromley and Chislehurst (Robert Neill), but he put the case very powerfully and effectively and I support it. Unless we sustain these amendments by voting against the Government—it gives me no pleasure to do so—we will expose the Humberside ports and those in Liverpool and elsewhere to a very serious and messy situation in which firms will go bankrupt, people will be laid off, and jobs and businesses will be lost. I am not prepared to support the Government in their proposals to carry that through.
Lords amendment 11 is designed to rectify the disastrous situation caused by the retrospective rate demands issued to port operators—I emphasise that this applies to port operators, not port owners, who received a rebate on their business rates. It was the port operators who became eligible for separate assessment for business rates in 2005. The Valuation Office Agency tells us that that has been done. It went around to make the assessments, but it talked to the owners, not the operators. It did not give any notice; there was no consultation, which there should be have been, on raising the business rates. The assessment was based on what owners told the valuation agency about liability for business rates.
Separate assessment was the principle that came in for port operators in 2005, and the valuation agency told us that it had been done. Suddenly, however, thanks to a case in Southampton—it was settled out of court to avoid a definitive verdict against the agency—it was necessary to look at the assessments all over again. Many of these businesses were not assessed until 2008 for an assessment that should have been made in 2005. Whose fault was that? It was manifestly the fault of Government and the Valuation Office Agency. Perhaps the agency was understaffed because the Gershon economies had required it to shed labour, but in any event this was the fault of the agency rather than of the port operators, who have already paid business rates through what is known as the cumulo rental system. The business rate was part of the rent paid to the port owner, which is Associated British Ports in the case of the Humberside ports.
What the port operators are being asked to do is pay rates twice. Not only is it a sacred principle that everyone must pay business rates; in the case of the ports, everyone must pay business rates twice. It is inconceivable that such a principle should be imposed, and that it should be defended by the Minister. Indeed, a succession of Ministers have presented us with this ludicrous line of defence.
The whole thing was handled very clumsily and ineptly by the Valuation Office Agency. Assessments were rushed in at the last minute in 2008. Many of those assessments are now being reviewed through the so-called fast-track procedure, which takes several weeks. We do not know how many are being reviewed, but although—as the hon. Member for Bromley and Chislehurst pointed out—local authorities are now being pressurised into demanding the rates, they cannot be levied until the fast-track assessments have been completed.
I do not object to individual year-by-year assessments of these businesses. What I do object to, strenuously, is the retrospective demand for three and a half years of business rates, dating back to 2005. How will that be possible? The businesses have already charged their customers—a process that often involves intense haggling. They cannot go back to their customers and say “We are sorry, but we will have to increase the charges.”
May I issue a plea to my hon. Friend to stop pulling his punches? Is not the position even worse? Operators who have created and maintained jobs in our constituencies believe that they have paid their rates through their charges. It is not just a case of retrospection. A poll tax is being levied retrospectively on operators who have already paid what was expected of them.
I was under the impression that I had just said that, but it is indeed true. The operators have been asked to pay business rates twice, and there is no justification for that.
If the Minister does not abandon her opposition to the Lords amendment and say “My God, Grimsby, you are right; I never thought of that,” I should like her to tell us how the port operators are to be compensated for the money that they paid in business rates for the period between 2005 and 2008. What will happen to that money? The owner, ABP, has received a full rebate for the money that was paid by the operators, which is ludicrous, and it now says that it will not give the money to the operators because it is ABP’s money and it must run businesses itself.
The operators are being threatened with retrospective business rate bills which they cannot pay because they cannot increase their charges retrospectively, and asking them to do so would be bad business practice. The Government, recognising guiltily that they have made a mess of things, are exceptionally allowing the operators to pay over a period of eight years, but that will be of no great benefit, because the debt must go on the balance sheets, and if the balance sheets suggest insolvency, the businesses will be operating while insolvent. As the hon. Member for Bromley and Chislehurst pointed out, if insolvency threatens, investment will fail. DFDS has already announced its intention of cutting investment.
The ports will change. Will the cars still come in through Grimsby—the great car port of the western world—or go out from Grimsby, for that matter, or will the operators change the way they do things and bring them in by other means? That is quite possible. We will certainly have the shedding of jobs and the closure of businesses. Freshney Cargo Services has been much cited in recent debates, and was cited again today—this time accurately, I was glad to note. That firm’s very existence is threatened.
Those of us who oppose this regime have had two Adjournment debates and endless meetings with previous Ministers. We have been very well received and we put our case, but the Ministers were all junior Ministers—we never got to see the Chancellor or the Secretary of State for Communities and Local Government, who are the deciding forces—and they told us, “As junior Ministers, our hands are tied.” It is the job of junior Ministers to defend the indefensible, and they have done that very well, but there have been no concessions at all—we are beating our heads against a brick wall. As my hon. Friend the Member for Brigg and Goole (Mr. Cawsey) pointed out, that is what Ministers get the car for.
Our warnings about the disaster that will come have made no impression at all. It is now going to hit us, but all we have had is a litany of excuses such as that if the retrospective rates demand were waived it would be an inappropriate aid to industry, and it would break a sacred principle of the ratings system in respect of retrospective charges. We have been told that the businesses, many of them small businesses, should have known—by divination or telepathy or some other form of spirit medium—that they would have to pay these charges. A load of rubbish has been told to us. We are in the position of mushrooms, with manure regularly thrown over us by junior Ministers of the Departments concerned. Frankly, I am fed up of being in that position and of talking about a situation that is so serious and of having Ministers take no notice. We had another Minister take no notice today; a new Minister adopted the old skills of taking no notice of the case.
The principle the Lords amendment proposes is a simple one, and it already operates. That principle is that where there is a reassessment that comes at the volition of the valuation agency and not the business, there will not be retrospective charging of that reassessment. That is a good and sensible principle, because what we have here is an inefficient agency with tyrannical powers, including the power to impose a large retrospective payment. It should not be allowed to use those tyrannical powers in defence of its own inefficiency. That is a good principle.
The Minister told us today that the increase is not backdated if the error relates to premises on the list, but is backdated if the error relates to premises that should have been entered on the list. The premises in question should have been entered on the list in 2005, so this is double-talk. They could be exempted from the retrospective payment, and this Lords amendment suggests that they must be. The Government could have done that of their own accord. Why did they not do so, and thereby save us all this trouble? Why did they impose this retrospective assessment that is causing so much trouble in the ports? The Government have the power; they should have used it. For the Minister to tell us, “Well, the premises should have been entered on the list,” is no excuse. Why were they not on the list, and what was their legal status? The owners of the premises were paying business rates; they were assessed for business rates separately in 2005, so why cannot this retrospective abolition of the retrospective principle be applied to them, as it should be? What is their situation?
The Minister told us that if we carried the amendment, it would have no effect. It is clearly not a retrospective amendment, but I will not believe it if I am told that if the Government accepted this principle—as they should, because that principle is in the legislation already—they would not retrospectively give way in the port operators’ case. They would, of course. They would obviously accept the general principle, and they would have to do justice even though the crime is only three months or so old. It is futile for the Minister to tell us that this measure would have no effect, because it would; even though the legislation is not retrospective, it would allow the abolition of the principle of retrospective demands for rates.
The state of these businesses is shown by some of the correspondence that has been sent to us by one of the lawyers advising us on this issue. He says:
“I was telephoned on Thursday by the accountant of one of the…businesses affected by the failures of the Valuation Office Agency. The accountant wanted to know the effect of the vote in the House of Lords”.
The effect of the Lords amendment was, of course, zero; it is not until we ratify it that it becomes effective, so this accountant is hanging on for today’s vote, in which we shall compel the Government to accept the Lords amendment. The correspondence continues by saying that the accountant
“was trying to decide whether he was obliged to qualify the company’s account with a note that it”—
the dock operator, one of several in such a position—
“was insolvent. He felt that he was obliged to do so but was desperately trying to find a reason not to qualify the accounts”.
We are told he did not want to complete the process by reporting the company insolvent. Like all of us, he is waiting for the relief of Mafeking, when the Minister will tell us that she accepts the principle of what we are saying and he can tell that company that it can continue to trade. The Labour party and the Government must accept this principle, because we cannot pursue these port operators in this fashion and produce the kind of devastating effect that this measure will have in the ports. We are not exaggerating: there will be very serious consequences.
I wrote to the Minister—we have never been able to see one of the top Ministers—asking that this Lords amendment be accepted. I also wrote to her asking that we should be provided with accurate information on how many of these port operators have paid, how many are still paying and how many have negotiated entry into the eight-year scheme. I have not received an answer. I do not think that the information is available. Ministers have tried to con us by saying, “A high proportion have paid. If some pay, we can’t abandon the charges on the rest.” That just ain’t true. We are talking about a unique category: port operators, who, under the new arrangements, are assessed for retrospective business rates. We need to know how many of them have paid. I hope that the Minister will tell us, because we can make these decisions only on the basis of that kind of information. I hope that if the Minister does not accept this amendment—I have been watching the flow of notes coming from the hard-faced men and women in the Box—
Order. The hon. Gentleman is a very experienced Member of the House, so he will know that we do not refer to people who are not in the Chamber in that way.
I am sorry, Mr. Deputy Speaker. It was tactless of me to refer to the complexions of those people in the reference that I should not have made—and did not make. The Minister has been receiving notes and I hope that they have changed her mind, because it is important to seize this opportunity to change the Government’s mind. If that does not happen, I shall certainly vote for the amendment and, unusually for me, support proposals coming from the House of Lords, which the Government can make retrospectively effective.
Our debate has become a little lively for this time of the afternoon. Interestingly, in many of our discussion we have discussed the potential for things to have an influence on local communities and for business rate supplement projects to be introduced, but we are now talking about the backdating of business rates for ports, which is having an impact on communities and businesses up and down this country.
The hon. Member for Bromley and Chislehurst (Robert Neill) referred to a certain irony, so I should refer him to remarks made earlier today by the hon. Member for Foyle (Mark Durkan) about irony in politics. We have heard references to the New Testament and the Boer war this afternoon, which goes to show that our debates are perhaps at their best when we can respond to real situations in the country. Although the Bill might not resolve the situation, it gives us the opportunity—as the hon. Member for Great Grimsby has just said—to send a clear signal of our intentions, to acknowledge the seriousness of the situation and to admit that it is the responsibility of the Government to put it right.
It must be acknowledged that the problem in Humberside and Merseyside has been caused by a mistake by a Government agency, although the businesses involved will have to pay the price. Even worse, their employees will pay the price if their jobs are lost. In the present economic circumstances, the Prime Minister has instructed, inasmuch as he can or is prepared to, banks that are now part-publicly owned to be as sympathetic as possible to businesses that are in difficulty and to support them as much as possible. HMRC has been instructed to be as flexible as possible in collecting taxes, to ensure that profitable businesses that want to invest in the future, provide employment and contribute to the economy are not put out of business needlessly by short-term demands that could be resolved. However, the Government are pressing ahead with the business rate system, which might make businesses unable to trade any longer. People will lose their jobs and it will affect investment in communities served by those businesses, with consequences for other businesses around the ports, including the construction and other ancillary industries. Although we might not have the opportunity to resolve the problem this afternoon, we can be part of the solution and contribute to addressing the issue.
Any problems that occur in port areas might have long-term consequences, as we have heard. If business is driven from the ports, it will find other routes and, probably, never come back. We need to reflect on just what the Government are asking us to do.
Will the amendment solve the problem? No, but it would give the Government the opportunity to acknowledge not only that the issue needs addressing, but that they have a way of dealing with it. It would also acknowledge that the situation in the ports is the fault not of the businesses but of the Government agency. The Government must admit that and try to do something to resolve the situation.
The Minister said that it would be inconsistent for the collection of business rate supplement to follow a different path from the collection of business rate. I can see what she means, and perhaps the amendment is an inelegant solution. But it will allow the House to vote and to show that many hon. Members feel that this problem needs to be resolved. If we can demonstrate the strength of that feeling, I hope that we can press the Government into action. That has happened in recent weeks with the Gurkhas. The Government said that there were insurmountable problems of precedent that could not be overcome. Members gave their view on that and, to their credit, the Government reacted. I hope that the same will happen this afternoon and we will reject the motion to disagree. If we stick with the amendments made in the other place, we will have a better Bill as a result.
I shall not detain the House too long, because when we debate this issue I feel increasingly that I am turning into Bill Murray in “Groundhog Day”. I simply turn up and say exactly the same thing over and again and get exactly the same response. At the heart of the matter is the fact that we are discussing Lords amendments to the Business Rate Supplements Bill, but a lot of us who represent ports represent companies that think that they are already being charged a business rate supplement. They have paid their rates once through the cumulo system—that is not really disputed, and, indeed, my hon. Friend the Minister said earlier that people should come forward with evidence of that if it exists. In a previous debate, I said to the previous Minister that Associated British Ports sent out a letter to those companies at a time when their business rates had been increased to say that the cumulo was being increased to cover the increase in business rates. If that does not prove that business rates are included in what they pay, I do not know what else can prove the point.
We have got ourselves into a completely unnecessary mess. The other place did this House a service by passing amendment 11. It has ensured that the issue comes back on to the agenda and that all Members can see that there is a solution. That solution might well have been directed at the problems in our ports, but the amendment is a good one in its own right. Even if the Government still feel uneasy about the port situation, what on earth is wrong with or offensive about the amendment? It should be passed and it should be applied to the ports companies. There can be no fairness when good companies are struggling to stay in business because they are being asked to pay, for a second time, business rates backdated to 2005. They can no longer go back to their customers and reclaim the money.
ABP, which is not the only owner of ports in this country but affects the area that I represent in Goole, has made it perfectly clear that the money that the Government have paid back to them will not be passed on. This is retrospection and double taxation. In fairness to ABP, it says that because although it might have got its money back in ports such as Goole its liability across the country has gone up, too. I do not think ABP sees itself as a winner out of this whole sorry tale, either.
I plead with the Minister, who is new to her post and who will have had all sorts of briefings and notes from officials that say, “Resist,” “Stick with the line,” and “Don’t let them grind you down.” We all know what happens in these scenarios. However, it needs dealing with because this problem will not go away. I might be wrong, but I think that the most likely thing that will happen today will be that the Government will win the day on the amendment, despite the fact that Members on both sides of the House will vote in favour of their lordships’ position. Of course, that will not be the end of it, because the amendment will go back to the other place. I hope that if we end up with that scenario, their lordships will take heart from the fact that there is cross-party consensus that the provision is just wrong and that it needs to be dealt with.
I had the great honour a few years ago, for one year, of being Parliamentary Private Secretary to the much missed Lord Williams when he was Leader of the House of Lords and I know what happens in this scenario. No Government want to lose legislation because of one bit of controversy, so at some point people have to sit down and to start talking about what will ensure that both Houses can reach an agreement. If we are unsuccessful today, I hope that their lordships will see that there is strong support in this House for the amendment and will sit down with representatives of the Government to thrash out a position that can be brought back to both Houses on which we will agree.
This matter will not go away, because it is manifestly and obviously unfair. Companies in ports up and down the nation are struggling in already difficult circumstances because of the failure to grasp this simple matter, which is not of the Government’s making. We all accept that the Valuation Office Agency messed it up in the first place, but there is an obvious solution. I refuse to believe that it is beyond the wit of people in this House and the other place to reach a solution together, so for goodness’ sake let us get on and do it.
With the leave of the House, I shall respond briefly to some of the points raised in the debate, but I shall begin by reiterating a principle. Many hon. Members have spoken about fairness this afternoon, and the principle is that a tax system such as business rates must be equitable to all. Any solution to a perceived injustice must not confer a disadvantage on other taxpayers who have paid and who were billed on time.
Prior to the ports review, some 1,600 separately assessed properties were liable for rates from 1 April 2005. My hon. Friend the Member for Great Grimsby (Mr. Mitchell) said that separate assessments were introduced in 2005, but that is not correct. The principle of separate assessment has been a long-standing feature of the rating system, and goes back as far as 1936.
I appreciate that the Minister is new in her post, but does she accept that, although separate assessment has been a feature of the general rating system, the cumulo system operated in the 55 registered ports until the latest change? The 1,600 separate premises were rated as separate hereditaments only when that change, of which the ports did not have notice, was made.
As far as I am aware, and according to the figures that I have, the 1,600 properties were liable for rates from 1 April 2005, and paid rates in 2005-06 and 2007-08. Removing a backdated rates liability would turn a perceived advantage for newly assessed properties into an actual disadvantage for existing properties that have paid their rates liability for previous years.
On the earlier point about empty properties, a landlord who takes over a rateable property that is empty would be liable for rates.
The Minister has confused the position. We are not asking for an unfair redistribution of the rateable value costs to those who already pay. Employers in our ports want to pay rates, but they do not want to pay rates and have this poll tax imposed as well. If that happens, they simply will not survive.
We are talking about two different issues here. One is the principle that separate assessment would be unfair to those who have been paying their rates; the other has to do with the cumulo, which is a contractual agreement between the port operators. We are not unsympathetic to the ports, but the Lords amendments are not the answer to the problem. They would affect the ability to levy a business rate supplement on businesses occupying properties where the rateable value has been altered retrospectively, but they would not impact on the backdated rates liability of some port operators.
I have heard the arguments about sending a message and setting a precedent, but the principle of fairness demands that we look at the system as a whole, including those who have already paid their rates. As I have said, we are not unsympathetic to the ports, and the House overwhelmingly supported the arrangements allowing liability backdated to 2005 to be discharged in instalments. I am pleased to be able to tell the House that that legislation is working well.
I can tell my right hon. Friend the Member for Birkenhead (Mr. Field) that, by 8 May this year, local authorities had reported that 185 properties covered by the ports review had paid £30 million of backdated liabilities in full, and that a further 88 business properties in ports had been granted a schedule of payments. In addition, my predecessor, who is now the Minister for Housing, met two of the port operators—Peel Holdings and Associated British Ports—to discuss the payment of fees and whether that included the payment of rates. Although the Government have facilitated discussions with some port operators about the merits of these issues, we cannot intervene directly between the ports and occupying businesses, as the responsibility for paying rates through tenancy agreements is a private contractual matter between the ports and the occupying businesses. I am happy to meet hon. Members who have ports in their constituency to discuss matters further, but I do not consider the amendments before us to be the way forward.
I echo the comments that other hon. Members have made: the problem is not of the Minister’s creation. However, she said that the amendments are not the answer, which implies that there may well be an answer to the problem. Hon. Members in all parts of the House would welcome an idea of what that answer might be, so that they could decide whether they need to send a signal through the amendments. I gave the example earlier of the Gurkhas debate. Some Labour Members chose not to support the motion in the name of my right hon. Friend the Member for Sheffield, Hallam (Mr. Clegg), because they felt that as they had received a promise from the Government the issue would be resolved. I am not clear that we are in such a situation in this case, or that there is a way forward. If there is, it would be good to hear about it.
I doubt that I can give a great deal of comfort, because the solutions suggested by hon. Members are not a possible way forward. That is why we gave an unprecedented eight years in which to pay, and came up with the fast-track process. I know that hon. Members have said that the fast-track system is not working as it should, but 40 proposals have been resolved under the fast-track system. Some 195 remain outstanding, and they have been transmitted, as appeals, to the Valuation Tribunal Service. We are assuming that early hearings will follow. Ratepayers have been invited to support early listing dates, but very few have taken up that option. Once the appeal is with the tribunal, there is also an onus on the applicant to speed up the process.
The Minister is being clear, but will she concede that, according to the figures she has given, only 230-odd properties have come to an arrangement, or are in the process of so doing? There are about 1,600 individual properties concerned. Secondly, on the fast-track process, I have details from RMS Holdings, which has been offered a fast-track hearing between now and September. It is difficult for it to take things up, if that is the best that it is offered under the fast-track proposals. Will she look again at the operation of the fast-track system?
I am more than happy to look into the fast-track system. However, the total number of proposals relating to properties in ports since November is 235 and, overall, 540 proposals have been made over the lifetime of the 2005 list. However, I am more than happy to look further at that fast-track system.
To go back to my original point, we are talking about a point of principle to do with the business rate system. It is about fairness. To repeat what I have said, determining liability takes us back to the issue of when the liability started, in 2005 or 2010, as it will do under the BRS system and in future. People who have already paid their business rates in full would be disadvantaged if we changed the system. That is why the decision was made to put in place the deferral system, which allows an unprecedented eight years in which to pay.
I fear that what the Minister said was not correct. The principle of the argument that we are urging applies to port operators. The principle of the previous legislation, as set out in regulation 5(3) of statutory instrument No. 2303 of 1989, was that all operational land of a harbour or dock undertaking was to be treated as a separate hereditament, irrespective of whether the property would otherwise form several separate hereditaments, or part of a single, larger hereditament. That principle was confirmed in the legal action that the Valuation Office Agency began against Grimsby Fish Dock Enterprises in 2002. One cannot split a single hereditament in the case of docks, or when the owner controls the access. That is what is happening. There are attempts to split the docks into separate hereditaments, and those are the ones—
Order. That is a long intervention. The hon. Gentleman has made his point.
My hon. Friend has the measure of me on that. I do not have the details of those regulations.
I go back to the policy that a business should pay its fair amount of rates from the point at which it occupies the property, and that all businesses should be treated in a manner consistent with fair competition. That is the principle on which we disagree with the Lords amendments, but the reason, as I said, is one of financial privilege.
Question put, That this House disagrees with Lords amendment 11.
Lords amendment 11 disagreed to.
Lords amendment 12 disagreed to.
Lords amendments 13 and 14 disagreed to.
Amendment (a) made in lieu of amendments 1 to 6, 13 and 14.
Lords amendment 15 agreed to, with Commons privileges waived.
Motion made, and Question put forthwith (Standing Order No. 83H(2)), That a Committee be appointed to draw up Reasons to be assigned to the Lords for disagreeing to their amendments 11 and 12;
That Lyn Brown, Natascha Engel, Sarah McCarthy-Fry, Robert Neill and Dan Rogerson be members of the Committee;
That Sarah McCarthy-Fry be the Chairman of the Committee;
That three be the quorum of the Committee.
That the Committee do withdraw immediately.—(Mr. Blizzard.)
Question agreed to.
Committee to withdraw immediately; reasons to be reported and communicated to the Lords.