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Grand Committee

Volume 710: debated on Monday 18 May 2009

Grand Committee

Monday, 18 May 2009.

Business Rate Supplements Bill

Committee (2nd Day)

Clause 5 : Prospectus

Amendment 18 not moved.

Amendment 19

Moved by

19: Clause 5, page 3, line 33, after “prospectus” insert “and a summary of it”

I will speak also to Amendments 20, 21 and 22. These amendments are about the prospectus that has to be issued as part of the consultative process. In part they come from the Federation of Small Businesses. The prospectus may be a complex document; I think it will have to be. My amendments provide for summaries of the prospectus, not to avoid the need for clarity, but to ensure that the information is accessible in every way.

There may well be campaigns around the proposals for the use of the business rate supplement. We all know how readily issues can be oversimplified. It is important that people can find a jargon-free explanation of the proposal which they can absorb without having to spend too long on it. My amendments propose that a summary as well as the full prospectus should be on the website and available for inspection.

Amendment 21 is about the availability of the prospectus. It follows an amendment tabled by my honourable friend the Member for North Cornwall in the Commons Committee. Like him, I am proposing that a copy of the prospectus should be available at the principal offices of the billing authorities, if the levying authority is not also the billing authority.

I thought that my honourable friend’s amendment produced one of the less persuasive responses from the Government on this Bill. The Minister argued that putting a copy of the prospectus in what would essentially be a small number of town halls would create additional costs and that accessibility should be balanced with those additional costs. He said:

“We need to show some restraint, therefore, in the requirements that we place on authorities”.

There are a lot of requirements being placed on authorities and I would have thought that copying a prospectus or running off another copy from the computer was not nearly as onerous as some of the things that they may have to do. He said:

“Making copies available in the principal offices of the lower-tier authorities could lead to confusion for ratepayers”,

who might think that the upper-tier authority was responsible. He also said that,

“good local authorities … would respect the views of key stakeholders and ensure that copies were available but does he believe that we in Whitehall should impose that throughout the country?”.—[Official Report, Commons Business Rate Supplements Bill Committee, 27/1/09; cols. 137-38.]

Whitehall imposes an awful lot and I think that this is something that it could very usefully impose. It is an utterly feeble response to a practical suggestion. I became the chair of my local authority's planning committee at a time when planning was being opened up to the public quite dramatically. I discussed with officers my proposal that copies of planning applications should go into local libraries so that people could see them somewhere that was convenient. The arguments that I was faced with were the cost and breach of copyright. I said, “Well, let’s do it and see what happens”. Nothing happened, except that people were able to go and see the applications somewhere local to them. I do not think that this is a major item in terms of complication, complexity or cost. I hope that the Government can look more favourably on it.

Amendment 22 provides that as well as the prospectus being available at all reasonable times of the day, it should be available for a reasonable period of time, which speaks for itself. It may well be implied that that would have to be so, but if the reasonable times of the day are spelt out, I wonder whether I am right in thinking that “for a reasonable period” would not actually be implied.

These are minor matters compared with the totality of the proposals in the Bill, but they would make it a great deal simpler for those who are going to be asked to pay to find out what they are being asked to contribute to and to be able to take decisions accordingly. I beg to move.

My appearance at the table here beside my noble friends Lord Bates and Lord Cathcart does not suggest that we have changed places. I hope noble Lords will forgive me, but it is simply easier for me to hear sitting here than it has been when sitting behind. A number of us in the House suffer from various levels of hearing impairment and I am certainly one of them. We will see how we get on.

I support the amendments, but I would like to add one thing. I do not know whether other noble Lords have been following the proceedings of the Select Committee under the chairmanship of the noble Lord, Lord Renton of Mount Harry, which is looking at the relations between this House and the public. One of the things that has stood out even from just the first two or three evidence sessions—I spent part of the weekend looking through the most recent one—is that concentrating on written documents being available at libraries and being sent within certain deadlines or available for inspection within a certain number of days is yesterday’s technology. Increasingly, one is hearing that it is the availability of electronic communications, and in particular of the internet, that is important. Huge numbers of people and businesses in this country and elsewhere rely on the internet to be aware of what is going on. If one is going to ask local authorities putting together their prospectus for a BRS to make sure that the people who are going to be affected by it have an early opportunity to see what is there and perhaps an opportunity to comment, that is by far the most effective method now. That is today’s and tomorrow’s technology. I am not quarrelling with the noble Baroness’s amendments, which are a useful addition to the Bill, but I hope that local authorities now recognise that if they are going to communicate with the businesses in their area, it might make a great deal of sense that they should do it primarily through electronic means.

I believe that this is what we are going to have to do. We await the report of the Select Committee, but having seen some of the evidence I hope that it will recognise that. Some noble Lords already have their own blogs. That is one of the ways in which you reach a wider audience. It is not necessarily for a conversation—you can waste an awful lot of time doing that—but simply to make information available. It seems to me that that is what the clause and the amendments are about and I would be grateful if the Minister could comment on that.

I wonder whether it would help the debate if I confirmed to the noble Lord that one of my amendments relates to the requirement to place an electronic copy on the website. I am seeking a summary of the document to go on the website as well as the full document.

I join my noble friend Lord Jenkin of Roding in welcoming these sensible amendments, which reflect the world as we now have it. The key point here must be engaging with the local business community and the people who might pay the business rate supplement. That is the purpose of Clause 5, we are told. These amendments simply expand that by providing a summary. That is a very good idea. A lot of these documents that will come forward will, necessarily, be extraordinarily long to cover the legal and financial data as well as the detailed plans. Simply saying that consultation consists of posting a huge pdf file on a government website somewhere so that somebody can download all 360 or 400 pages of it and trawl through it is clearly unacceptable, as well as being pretty bad practice for the environment when it comes to printing such a document. It ought to be there.

In supporting the amendments I should like to press a little further to ask whether we can look at methods that have been employed in the private sector to communicate with people and to get feedback. For example, if this was a private sector document I am sure there would be a page of frequently asked questions as well as a summary of the document. Essentially, people want to check what it means for them and how much they have to pay. That is pretty simple. We should make sure that that information is available.

Another point on which the technology has been available for a long time is the whole area of blogging. You can see on the BBC website and many commercial websites that this is a very good way not only of allowing people to see what the document means for them, but of seeing what other people in the local area have said about it. I would have thought that it would be the true mark of open government to move into allowing people to post responses on websites so that it all becomes part of the public domain rather than having to wait for the final document, which then again in hard copy summarises all the representations that have been made at great length. We also have to remember that we are dealing with the business community, which, by and large, is rushed off its feet, particularly at present. It does not have the luxury of government relations departments to pore through these documents; it has to do it itself. Anything we can do to make the document as succinct and clear as possible, to make it electronically available, and to make it possible for responses to be given in that same format would surely be in keeping with the modern era.

I hope the noble Baroness will forgive me—we are in Committee—but there was one more thing that I meant to say. Towards the end of last week we received from the department what we were referring to last Monday as the road map, containing the draft proposals on ballot and administration arrangements. I had understood the Minister’s covering note to say that we would get a hard copy. I have not had that; it has not arrived. This morning I printed off the attachment to her minute. I am afraid that on my printer upstairs, that took a good deal of time and a very large quantity of my scrap paper. We have had this before with government departments. I will not go through all the difficulties. Ministers are desperately anxious that documents should reach noble Lords here in time and they do not. It was helpful that we had the electronic copy, which enabled me to have it with me this afternoon, but we ought to have had a hard copy. The noble Baroness may wish to make her own investigations, but it seems that somewhere along the line there has been a failure of communication.

Let me start by apologising if noble Lords did not receive hard copies. I was very glad that we were able to get it out in the time that we suggested we would on the Wednesday by e-mail, but I will certainly look into that.

This has been an extremely helpful debate. It is very good to have all those ideas on the record for future reference, not least for local authorities, levying authorities and businesses as they come to draw up their prospectuses. I completely understand and absolutely share the motivation behind the amendment. Much of what the noble Baroness said appeals to me. Clearly, we want to be absolutely sure that copies of the prospectus are going to be readily available for the people who are liable to pay the supplement. I take the point that the noble Lord, Lord Bates, made about how busy the business community are.

However, I have to endorse much of what my noble friend said in the other place, because it runs through the Bill. We are trying not to over-prescribe. We are trying to signal to local authorities that they are free to go further than the minimum standards that we are laying down in the Bill. We are often berated for being too top-heavy in relation to local authorities. This is one instance in which we are very conscious that local authorities are going to have to do things their own way. For example, we are leaving it to authorities to decide how best to conduct the consultation that they must carry out with those who are potentially liable for the supplement. Clearly, these projects are going to differ in size and scope and it is going to depend on what existing networks there are and what technologies are commonly used and so on.

In the same vein, let me reassure the noble Baroness that we are leaving it to authorities to decide how to design their prospectus, but Schedule 1, for example, requires them to include cost-benefit information. I am very happy to put on the record that there is nothing to stop any local authority setting out an executive summary or a freestanding summary. It definitely must be in jargon-free language. It is extremely important that people know what they can expect from their contributions. Levying authorities can choose to send a summary to every business in their area. On Amendment 21, for example, hard copies of the prospectus must be made available at the levying authority’s principal office. As the noble Lord, Lord Jenkin, rightly said, they have to be able to make the maximum use of the speediest and most relevant technology these days.

We are requiring levying authorities to make electronic copies of the prospectus available on the website. There is no reason on earth why they should not make the summary available on the website in the same form. When we come to look at where this information is going to end up, again authorities are going to want to make sure that its location is clearly signposted so that those with an interest can access it, but they can go further if they choose to make further copies available in billing authority offices or local libraries or other resource centres. That is absolutely fine. We would welcome and encourage the maximum spread of this sort of information for the local community and we definitely agree on the point about reasonable times and reasonable periods.

We actively encourage authorities that think this is the best approach for their area and their project to use all the vehicles that they have available to them, but I do believe that we should not put unnecessary detail in Bill. We should not tell authorities how to do things. I have stood here more often than I care to remember being asked, “Why does the Minister not trust local authorities?”. I do trust local authorities to do the right thing in their area. It is proper that minimum standards are put in place, but I also think that they have to decide what is best and what communication will be most effective and most persuasive.

In the light of this debate, it is important that we spend some time on the guidance and make sure that it reflects the breadth and scope of what might be possible so that we pick up some of these ideas and reflect them in guidance. I hope that the noble Baroness will be satisfied with that.

I recognised that I was going to be caught by my own argument. In response to the points made by the noble Lord, Lord Bates, about frequently asked questions and blogs, I have written, “Nothing to preclude that”. I am aware that I might be arguing against myself, although it would be quite nice to see whether we could be the first group of people to get the word “blog” into primary legislation.

I applaud the noble Lord, Lord Jenkin of Roding, for being so ambitious as to think that we might anticipate tomorrow’s technology. I am barely catching up with yesterday’s, but he is absolutely right.

The noble Baroness leaves me with a question, which I suppose is rhetorical: if we leave it to local authorities to decide how to deal with the prospectus, why do we need Clause 5(3)(a), for instance, which says that the levying authority must place an electronic copy on its website? Simply requiring the authority to publish this prospectus, on the basis of her argument, would be enough. However, I am not going to get any further at this point. These may seem small matters, but they could be fairly significant. I am obviously grateful to the Minister for her reference to guidance. At this stage I beg leave to withdraw the amendment.

Amendment 19 withdrawn.

Amendments 20 to 23 not moved.

Clause 5 agreed.

Schedule 1 : Information to be included in a prospectus for a BRS.

Amendment 24 not moved.

Amendment 25

Moved by

25: Schedule 1, page 21, line 18, at end insert—

“(d) the likely impact of the imposition of a BRS on those contributions towards funding public transport works that are treated as allowable deductions.In this Schedule—

“public transport works” means works undertaken to provide services on which members of the public rely for getting them from place to place when not relying on facilities of their own;

“allowable deductions” means expense occurred in the course of carrying on a business under Schedule A or Schedule D (Cases I and II) of the charge to tax under the Income and Corporation Taxes Act 1988.”

I beg to move Amendment 25 standing in my name and that of my noble friend Lord Brooke of Sutton Mandeville. I have been asked to proffer his apologies to the Committee. He had expected this amendment to be dealt with last Wednesday. He is not able to be in his place today and I readily agreed to add my name to the amendment and to move it.

The amendment inserts a further requirement for the prospectus when a supplementary business rate is sought. The authority would have to assess the impact of the proposed supplementary rate on voluntary contributions that businesses may already be making to support public transport projects. The amendment had to be drafted in that form to put it within the rules of the House.

The issue that I wish to raise briefly this afternoon is more fundamental. Through the amendment I seek to explore how far the voluntary financial contributions made by businesses to fund public infrastructure projects from which they benefit are tax-deductible.

That is why the voluntary contributions concerned are defined in the second part of the amendment as those that are allowable against tax as business expenses under the Income and Corporation Taxes Act 1988.

I am well aware that the whole question of whether local authorities should have powers to raise additional business rates is contentious. I read the Second Reading speech of my noble friend Lord Bates and I very much understood what he was saying, but I do not intend or need to take a position on that question this afternoon when dealing with this rather specific amendment.

The motivation behind the amendment is prompted by the funding of the Crossrail project. I think it is fair to say that there is general agreement that an additional business contribution is necessary to support Crossrail. On Second Reading of the Crossrail Bill I asked the Minister what would happen if the voluntary contributions from business were for some reason not forthcoming. I have not checked it out, but my recollection is that we would have to deal with that if it happened. Of course, the remedy, following the reports to which much reference has been made, was that there should be new legislation, which we now have before us, to provide the contribution from the private sector to help to finance that hugely important project.

The City of London Corporation agreed in October 2007 to contribute £200 million out of its own coffers. It also agreed to seek voluntary contributions—that is why this issue arises—up to a total of £150 million from businesses that will benefit from Crossrail. Of course, as we all recognise, raising voluntary contributions at the present time must be particularly challenging, but any business considering making them is likely to be more favourably inclined to do so if it can be sure that such contributions will be tax-deductible as a business expense.

The position of business rate payments is quite clear. The Business Income Manual, produced by Her Majesty’s Revenue and Customs for its staff and published for the information of taxpayers in accordance with the code of practice, provides:

“Business rates are payable in respect of non-domestic premises. If part of the premises is used for domestic and part for non-domestic purposes, the charge is limited to the non-domestic part. Business rates are therefore usually an allowable deduction in computing profits assessable under Schedule D Cases I, II or under Schedule A.”.

If business rates are deductible, it follows that the supplementary business rates envisaged by this Bill will also be deductible. Perhaps the Minister will confirm that.

As a matter of policy, if supplementary rates levied to support public projects are deductible, it would seem right in principle that voluntary contributions made by businesses for precisely the same purposes should receive precisely the same treatment. This seems to be supported by the law if businesses make contributions because they would benefit from the improvements, which presumably will usually be the reason prompting them to contribute. It is a long time since I was practising at the tax bar, but my recollection is very clear. A business expense is allowable if it is incurred wholly and exclusively for the purposes of the business. Those who make voluntary contributions to the Crossrail scheme will, without doubt, do so in the context of much-improved cross-London communications that the scheme will bring to their business operations, and therefore because they are benefiting from it.

Therefore, the case for deductibility appears entirely legitimate. However, in view of the importance of the Crossrail scheme and the incentive which deductibility may provide to businesses which might be inclined to contribute voluntarily, it really would be helpful if the Minister could indicate the position in general terms either today, or perhaps—she may prefer to consult—in correspondence. Of course, I will understand if she wishes to write with a substantive reply, but I am sure that she understands that tax deductibility may be quite important to a business that is contemplating making a voluntary contribution. I should have thought that the Government would wish to support anything which could help this absolutely crucial infrastructure forward. I beg to move.

I am grateful to the noble Lord for how he introduced the amendment and the background, which is useful to have on the record. I am sure that the noble Lord, Lord Brooke of Sutton Mandeville, will be pleased that we have had a full explanation in that form. I can be quite swift in answering this. It clearly raises an important point as to whether voluntary contributions to BRS will be permitted deductions from corporation tax, as is the case with rates generally.

I can confirm, as the noble Lord has asked, that BRS builds on the current business rates system. As such, any BRS payment a local business is required to make towards the cost of the project will be a permitted deduction from corporation tax.

The noble Lord has raised the other important matter. It is complex and I will have to write to him. I will surely do so as swiftly and as comprehensively as I can. In the mean time, however, I hope that the noble Lord having put that on the record as he has will enable business partners, particularly those in Crossrail, to see that we are seriously debating the issue.

Before I withdraw the amendment, those who asked me to table it have had some discussions with Her Majesty’s Revenue and Customs which they did not find particularly positive. It is difficult to see why that should be so. I hope that the noble Baroness, to whom I am most grateful for undertaking to write, can put the case as firmly as she can. It is clearly in the interests of all of us who want to see this great scheme come to fruition. This project has been in my consciousness for well over 20 years, and one now sees the prospect of it starting; indeed, the Prime Minister dug the first hole, or whatever it was, for one of the stations the other day. However, there is no question but that tax deductibility of voluntary contributions could make a considerable impact upon the willingness of business to put them up.

Before the noble Lord withdraws his amendment, as I assume he is about to, can the Minister confirm that she can write to us before Report? The noble Lord has raised an extraordinarily important point which will affect our attitude to the whole Bill. If we do not have definitive response before Report, we will be really rather stuck.

Amendment 25 withdrawn.

Amendments 26 to 32 not moved.

Amendment 33

Moved by

33: Schedule 1, page 22, line 16, at end insert—

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

(a) be kept informed of what monies have been raised in pursuance of the BRS and how they have been expended, and(b) be represented upon the governing body of any organisation set up for the purposes of delivering the objectives of the BRS, or, if such an organisation is not to be set up, how such persons are to be involved in the oversight of the delivery of such objectives.”

The amendment is fairly straightforward and I will not take a great deal of time in introducing it. I shall be grateful, however, to hear the Minister’s response.

The amendment seeks to follow the theme of ensuring that businesses are kept involved in and apprised of how a scheme is going. Once they have committed and contributed to a scheme, they deserve to be kept informed to ensure that the project proceeds according to plan. This fits in with the point made during Second Reading about the contribution that businesses can make to major projects which extends way beyond their financial contribution. The knowledge and expertise involved in delivering projects on time and to budget is higher in the private sector than in the public sector, particularly under this Government. I do not want to impose any further disappointment or sadness—as has already been said, the Prime Minister is digging holes—but that has been observed.

The key point is what happens once the money has been committed and approval has been given; how are businesses kept involved? The proposal in the amendment follows the recommendation made in the Lyons inquiry that businesses should have a strong voice in the final decision on the supplement and that that voice should be continuous throughout. By what mechanism can this be achieved? In a business improvement district, for example, there are boards of directors, governance bodies, governing bodies and special purpose vehicles can be established, and representatives of the business community can be on them. I have alluded in previous debates to the City Challenge schemes which were introduced by the Conservative Government in the 1980s and 1990s. They were based very much on partnerships between the public and private sector and on the private sector having a real seat at the table when decisions were made.

The amendment simply makes that point and seeks to put it in the Bill so that it cannot be avoided. It gives a structured role for business to oversee the use of funds and the delivery of projects; it draws on its expertise; and, as business will have made a contribution to a project, the amendment acknowledges its right to sit at the table to ensure that the promised benefits are delivered. I beg to move.

I support the noble Lord in his thinking behind the amendment. I am not quite sure about being involved in the oversight but the principle is quite right; businesses need not only to be kept informed but there should be a mechanism allowing their views to be made known. In my mind I equate business rate payers with shareholders in a company; they are not necessarily on the board although they may have a representative on the board. The second subsection of his amendment could lead to quite complex arrangements, but his points are quite right.

Picking up briefly on my noble friend’s comments perhaps I may ask the Minister whether in giving her reply—which I am sure will be as comprehensive as ever—she will focus on the two critical issues of the amendment: first, what she considers to be the appropriate apparatus for the strength of that voice; and, secondly, the continuity, so that it is not a one off but the continuity principle is respected.

I shall try to do that because these are important points. They go to the heart of the commitment that the partnership makes to ensure that all the partners are fully informed in their ownership of what is being done. The amendment is in two parts and would require levying authorities to expressly set out in their prospectus how they will involve stakeholders in the delivery of BRS objectives.

If a levying authority intends to set up an organisation to deliver the BRS-funded project, the amendment proposes that the prospectus should explain how BRS ratepayers are to be represented on the governing body. Where no such organisation is proposed, the prospectus should describe how those who would be liable for the BRS would be involved in overseeing the delivery of the project.

We have talked quite a lot in the Committee about the notion of the Bill being a flexible framework with safeguards within which local authorities can tailor what they do to suit their community and partnership and how they should operate in order to levy a BRS for their specific economic development project. The Bill already requires levying authorities to set out in their prospectus how they will provide business with information about progress on the BRS-funded project.

That is a very important point because this will be a dynamic project that may take many years, and it is vital that business is kept continuously up to date with what is being delivered under the commitments. I am sure that that is partly what Lyons meant by a “strong voice”. That would have to be clear in the prospectus and one would have to ensure that that was what was delivered in terms of the communication strategy.

The second part of the amendment relates to governance. As the noble Baroness, Lady Hamwee, said, issues are raised here concerning the nature of the governance choice, and it involves complexity. Every area is different, with different needs and levels of partnership working, and different resources at their disposal. Therefore, flexibility and local autonomy are very important in order to tailor governance procedures for projects.

Given that the projects may be using BRS to a greater or lesser extent, I would be afraid that, if we were to lay down anything more than a broad set of principles here, we might end up with a governance body that was not fit for purpose, or it might be fit for one type of purpose but not for another. We need to respect potential diversity and ensure that the governance arrangements are as good as they need to be and right for each area. For example, we might find that a project is managed by a few key local businesses or by an outside contractor, and both will require a different set of governance methods. They may choose to draw on the expertise and experience of businesses that may not have to pay the supplement because, for example, they fall below the £50,000 rateable value threshold. We must not emphasise one aspect of governance more than another, although of course there must be clear governance procedures for every project. Although I respect the intention behind the amendment, we should not bind the hands of local authorities and business regarding how they wish to manage their project. I hope that having that on the record will help the noble Lord.

Not exactly. Normally the Minister is extremely helpful, but not on that point. I shall respond more generally on the amendment but, specifically, could circumstances be conceived where a business rate supplement levied in a given area was the subject of a ballot and therefore the subject of an affirmative resolution in that ballot? As a result, voluntary contributions and business rate supplements would be levied in that area in order for the project to go ahead and there might be no business involvement. Is that a conceivable possibility?

No, I should not have thought that it was a conceivable possibility because the whole point is that the partnership with business makes this different from the partnerships that exist at the moment. Therefore, there must be a business element.

Therefore, if a circumstance where that might be the case is not conceivable, would it not be appropriate to have it stated somewhere in the Bill or its schedules?

I am not certain that I am following the noble Lord’s argument. I am not quite sure what he would want to see in the Bill which is not expressed already in terms of that partnership.

One of the problems that we may be wrestling with is that, because the partnerships will be different in each area—for example, there may be third-sector partners in some areas, or levying authorities or different sorts of private and public partnerships—we may not want to identify just one partner in the way that the noble Lord suggested, bearing in mind that we shall have to try to represent and encourage a range of partnerships.

We are getting a little bit closer—I thank the Minister for that—but we are not quite there, because all the partners are not necessarily equal. The amendment stipulates that representatives—obviously, not all—of those people who are contributing to the project be present. The noble Baroness, Lady Hamwee, rightly said that it may be analogous with shareholder/stakeholder involvement, where there may be representatives on the board to look after the shareholders’ interests, and that it might be entirely appropriate that, on projects of this nature, where we are borrowing a lot of that language in talking about ballots and prospectuses, we see that through and say, “Yes, there ought certainly to be some business representation on the board, not simply for tokenism but to monitor that the promised benefits are delivered”.

Yes, I take the noble Lord’s point. Perhaps he will let me think about what he said. We have some scope in guidance, again, to ensure that. It is probably the judgment that we would come to. Will he leave that with me? Perhaps we can talk about it between now and Report. My main point was that we should not tie the various projects in the various local areas into a formula for governance which will be neither adequate nor appropriate in some cases. However, I take the noble Lord’s point about business, because, after all, this is a Business Rate Supplements Bill and business is a key partner in all of this.

I am reassured by the Minister saying that she will take the matter away and look at it, in particular the points of my noble friend Lord Moynihan, which were succinct and went to the heart of the issue. He said that appropriate opportunity should be given to the business community.

It is extremely helpful that the Minister will go away and think about my noble friend’s important suggestion; namely, to see whether it is possible to place in the Bill not the details—which as the Minister stated, will differ from area to area—but the principle that business will have a strong voice and that there will be continuity of representation. That would be enshrined in the Bill and taken into account in the context of each case, the detail of which neither we need nor would it be appropriate to delve into because that flexibility is needed. I hope, however, that the principle will be accepted.

I am grateful to my noble friend for making that point. We understand that there needs to be flexibility in these matters to fit local circumstances, which will take many different forms. However, establishing the basic principle of engaging business and giving it its voice will, if nothing else, perhaps ease the way for the contributions which the business community is about to make. If they are making serious contributions and they have a seat at the table to ensure that the investment goes according to plan, that will surely be helpful. It might even be more helpful should there be additional voluntary contributions raised towards a particular project from the private sector. Again, seeing that there is good representation from the business community would aid that process.

All that I would add is that I could not conceive of a governance arrangement for one of these projects that did not have the business partners on it as they are so critical to it. If it helps to have that on the record, I have just put it there.

The Minister has been clear in that regard. It is a commitment for which we are very grateful, but it would give a great deal more comfort, notwithstanding the high standing of the Minster, if that could be expressed somewhere in the Bill or in its attached schedules. With those assurances I am happy to seek leave to withdraw the amendment.

Amendment 33 withdrawn.

Amendments 34 to 37 not moved.

Schedule 1 agreed.

Clause 6 : Consultation

Amendment 38

Moved by

38: Clause 6, page 4, line 21, leave out “think whether it would be appropriate to”

I shall also speak to Amendments 39, 40, 46A, 63 and 66.

At Second Reading, I expressed my concern that there seemed to be, perhaps understandably, some polarisation between the business community on the one hand fearing that the evil local authorities would rush to impose unwanted and unnecessary taxes on them, and on the other, local authorities fearing that businesses would automatically be against any tax simply because it was a tax, however worthwhile the project might seem. I believe strongly that it will not be like that. Indeed, any successful project for BRS could not be like that. The process will work, I expect, in much the same way as a successful BID works in its preparation—in partnership. The representatives of the business community will work with the levying authority in partnership to conceive the project and work out the prospectus, and by the time that is done I would expect them to campaign together for a “yes” vote if there is a ballot, or for a successful outcome to any consultation. Idealist as I am, I do not necessarily see this as one side against the other. I see it very much as a partnership working together for something that is recognised to be of mutual benefit and of benefit to the local area.

We have to recognise that to achieve this is an issue of trust. However good the representatives of the business community may be, there will always be some businesses for financial or other reasons that are less happy. Amendments 38, 39 and 40 address Clause 6, which is about consultation. Amendment 38 would delete the requirement for the levying authority simply to think whether it was appropriate to consult, but would actually require it to do so. That is a necessary reassurance to a business community. It will be consulted not just because the levying authority wants to but because the authority must consult. Should levying authorities be reluctant to consult, for whatever reason, the knowledge that they are required to do so would encourage them in proper thinking from the start. If there is to be consultation the results clearly should be published, which is the purpose of Amendment 39. Similarly, Amendment 40 requires a levying authority to publish a revised version of its initial prospectus regardless, not simply whether it thinks it might want to in the light of the consultation.

Amendment 46A moves on to Clause 10 and again would require a levying authority to specify charges—previous, current and future—as suggested in the amendment. Amendment 63 relates to Clause 29 and requires consultation before regulations are made. Amendment 66 similarly inserts regulations about ballots.

The amendments, particularly the first three, would go a considerable way towards the reassurance that we have been talking about for quite a part of this afternoon in making clear to levying authorities what is expected of them and, similarly, giving some reassurance to the business community of what it may expect—that the consultation will take place not because a levying authority thinks it may be appropriate, but because it is appropriate in all circumstances. I beg to move.

We are quite comfortable with the amendments. The only concern that we have about them is the extent to which they add to the bureaucratic and time delays that may be involved. Again, this links back to a debate that we had on an earlier amendment; that the greater use of technology might enable this process to be conducted in a speedier way. Certainly, we support the general thrust of the amendment.

I was not going to speak this afternoon; in fact I was slightly apprehensive about having to speak this afternoon. The last time we were in Grand Committee, the helicopters were going overhead the whole time, and it was extremely difficult to hear. It must have been very difficult for Hansard to have got down all our words accurately. If the Committee remembers, last time in Grand Committee, I was talking about the dualling of the A11, and I said that that would be of benefit to those businesses around the A11. I went on to say that it would probably be of little benefit to King’s Lynn and then I said—I will have to say this clearly—“and market towns around King’s Lynn like Downham Market, Swaffham”, and I went on to list a whole raft of towns. Imagine, to my horror, when I read Hansard the next day, and it said:

“I mentioned King’s Lynn. There are lots of down-market King’s Lynns, such as Swaffham, Dereham, Fakenham”.—[Official Report, 11/5/09; col. GC328.]

It listed a whole raft of towns. It was not my intention to say that at all. They say when you are in a hole, stop digging; but it is worth my while getting up this afternoon to dig a little bit further to try to put the record straight, because everyone will know that I am a strong supporter of all things Norfolk.

I will say a few things about the amendment. It imposes a duty on the levying authority to consult on the proposal in an initial prospectus and to publish the results of that consultation. However, the consultation can be ignored; we have been there before in earlier debates. Providing the business rate supplement is below 33 per cent of the total cost of the production of the project, the levying authority can press on regardless. This ties in with the up-market King’s Lynn point that I made earlier. Of course, it can benefit all those businesses around and along the A11, but it will have no benefit to those other areas in the north-west of Norfolk. They can be consulted on, but the levying authority can completely ignore that consultation.

This ties in with something else that I tried to bring up during our previous day in Grand Committee. I suggested that it would be better if a local authority asked the business community what infrastructure projects it would like most, and then one might be able to get a consensus. The consultation process would probably be much more favourable if it were done by asking the business community what projects it wanted, rather than the infrastructure levy saying, “This is the project that we are going to do. What do you think about it?”.

I am very glad that the noble Earl had the opportunity to correct Hansard. I cannot imagine what his postbag from Swaffham and other parts of rural Norfolk has been like.

I had to go back last weekend under the cover of darkness. I crept in and kept a very low profile. I am hoping that, if Hansard gets it right today, I shall be able to go back to Norfolk in daylight hours.

We have all had experiences of Hansard and of problems that we have created. I remember when I was a health Whip confidently promising to spend most of the NHS budget on aromatherapy. I read the report of it in Hansard the following day and had to make some urgent corrections.

The noble Earl’s point about the validity and integrity of the consultation process and the extent to which it is a serious exercise is important. Many is the time that we have debated the nature of consultation in the field of housing and local government, and this is another opportunity to do so.

I was slightly puzzled by the argument that the noble Lord, Lord Tope, put forward simply because he rightly talked about the nature of the trust implicit in a project such as a BRS. It will involve a significant amount of commitment and there will have to be a complete understanding of what everyone is signing up for. Therefore, the quality of the consultation between business and the levying authority and the frankness that is involved will be important. However, the amendments are about requiring authorities to do that, which seems to go a little beyond the notion of trust.

Amendments 38 to 40 and 46A all relate to the consultation that authorities will be required to undertake before levying or varying a BRS. I could not be more supportive of the general principle that the consultation has not only to be serious in purpose but to lead to a reflection in the prospectus of what has been consulted on and agreed. That is at the heart of what will make a project a success.

Amendment 38 requires authorities to consult businesses that they think will become liable for the supplement at some point in the future. I certainly agree that local businesses should have confidence that, if they are to be affected by a BRS, they will be consulted. However, I have to deal with the amendment in its own terms, and requiring this to happen as a matter of course could lead to some very unwelcome uncertainty.

The Bill currently provides that levying authorities must consult all those who will be liable for the supplement, as well as the lower-tier authorities in the area and other persons whom it considers relevant. Clause 6(5) also makes it clear that, in considering which other persons should be consulted, the authority must consider whether to consult those who might become liable for the supplement at some point in the future and pay particular attention to those persons. That, in itself, is a mark of the integrity of the process. Because these projects will, in many cases, span a number of years, the possibility that other businesses might be swept up in the threshold should also clearly be taken account of. The problem is that there is an inherent uncertainty in predicting changes. It is obvious that it will not always be possible for levying authorities to identify who might be available.

I am grateful to the Minister, but I understood the intervention of the noble Lord, Lord Tope, to be different to that. I thought that he was arguing that rather than adding greater uncertainty, the introduction of the amendment would reduce uncertainty. At the moment there is a double level of uncertainty in the Bill. The first uncertainty arises because the levying authority has the freedom to “think” whether it would be appropriate to consult. So, before it does anything else, it can sit down and determine the outcome to that process. That could be a very uncertain process and, as it is written today, would be an uncertain process. Having then decided who it thought would be appropriate, the levying authority then has a second opportunity where uncertainty could exist, because it is asked to consider who it thinks might become liable to pay a chargeable amount; a second issue.

If the Minister is seeking to remove some of this uncertainty, she would do well to support the admirable amendment tabled by the noble Lord, Lord Tope, particularly since both clauses which provide for such flexibility relate back to the consultation on the prospectus, where already there is further opportunity for consideration as to whether the authority thinks others should be consulted. Clearly that is not the case as it is in subsection (5) for those who are going to be charged but, nevertheless, in the context of Clause 6 it would add yet another level of uncertainty. This could helpfully be clarified by acceptance of the amendment of the noble Lord, Lord Tope.

I am grateful for the intervention. We will have to ask the noble Lord, Lord Tope, to explain his amendment in due course. I shall plough on with my interpretation and we can then ask him to adjudicate.

The noble Lord, Lord Moynihan, explained my amendment very well indeed and far better than I would do. If the Minister ploughs on, as she puts it, I may become more clear what further explanation is needed.

Clearly the certainty that we are looking for may be contained in the word “require”. My argument is that there is an uncertainty about trying to predict what is likely to happen in the future for businesses that might become liable because we cannot predict revaluation and so on. It is because of the difficulty in predicting who might become liable that we want to leave it to the discretion of the levying authority to make the right judgment for its area. That is why the Bill is drafted in the way that it is.

For example, if there were a number of businesses in an area which occupy premises with a rateable value of £49,500, they at first would not be liable for a BRS; but if the levying authority intends to levy its BRS for 15 years, it is quite likely that those businesses will become liable for BRS in its lifetime because there would be at least two revaluations during that lifetime. Therefore we would expect the levying authority to use its discretion and consult those businesses which are on the margin from the outset. But if the project is going to take a longer time, for example, more than 15 years, businesses occupying premises with a significantly lower rateable value now might in due course see their rateable value approaching the £50,000 threshold. But they might not—it is a hard judgement to make—and this is why Clause 6(5) states that, in considering which other persons should be consulted, the authority must consider whether to consult those who might become liable. We have introduced that degree of flexibility and discretion into the Bill.

The Minister gave a very good example that would be amply covered by the amendment of the noble Lord, Lord Tope. A better example with which she might be able to assist the Committee would be to show how it could be inappropriate to consult those whom a levying authority might believe at some stage in the future could pay a chargeable amount and therefore should be consulted.

Can the Minister give an example of when it would be inappropriate? If it was a compelling argument, it could be a reason to keep the wording in the Bill as it is. She has given the case when it would be appropriate, so in that context the phrase could be deleted from the Bill altogether. I apologise to the Minister, but it would be helpful to understand the purpose of the words,

“think whether it would be appropriate”,

in Clause 6(5), and whether they assist the legislation.

I gave two examples of what I thought would be the parameters of potential uncertainty. I am not sure whether I can give a better example. Clearly, I shall have to write to noble Lords on this point to explain the significance of our language. As the Bill is drafted, levying authorities can use their discretion to conduct a consultation that is proper and proportionate in relation to their plans. The amendment would make it more difficult for levying authorities to use their discretion.

While I am certain that we want as full a consultation as possible and an anticipatory consultation, I do not want to bind the levying authority in the way that the amendment would do. I do not know whether the noble Lord wants to intervene now, or whether I should go on to the other amendments.

I do not think that we are getting anywhere by pressing this further. I accept the Minister’s offer to write to us; we are just not making ourselves very clear. I am extremely grateful to the noble Lord, Lord Moynihan, who clearly understands my intentions—possibly even better than I do. Even deleting the words proposed by Amendment 38, subsection (5) still allows the levying authority,

“to consult persons who the authority thinks might become liable”.

Those words imply a discretion, or judgment. I do not understand the point that the Minister is making, and equally she does not understand me, but it is not appropriate to press the amendment. We will have the opportunity to read the Minister’s letter and perhaps better understand each other, and then insert the amendment, which I am sure will be readily accepted when we do understand each other as we get to the next stage.

I am very grateful to the noble Lord for his gracious offer. We are discussing a complex concept and are dealing with different timescales for different BRSs, within which periods there may be different opportunities for re-evaluation, and so on. It is difficult to be categorical, apart from the general principle that I am trying to explain, but clearly failing to do so. I would appreciate the opportunity to write to noble Lords to try to set out some models of how I think this will operate.

I turn to Amendments 39 and 40, with which I hope I will have more success. They would require levying authorities to publish the results of the consultation on the initial prospectus. Amendment 40 would require levying authorities to publish a revised initial prospectus following the consultation but before the publication of the final prospectus. I completely understand that a consultation process needs to be transparent, it must demonstrate that the concerns and comments regarding the BRS will be taken seriously and that that will be reflected in the final plans for the project. I agree. That is why, following the consultation, levying authorities will be required to publish a final prospectus incorporating the comments and views expressed, reflecting how the supplement will work following the comments made by local businesses and others.

That final prospectus will provide local business with clear information on the details of the supplement to be implemented, and there should be absolutely no surprises for business at that stage. It should mean that there is certainty about the level of the supplement, its duration and so on. There will be clarity on the expected costs and benefit of the project that will take on board comments made during the consultation, and we will be clear about how the supplement might have changed as a result of the consultation.

It might reasonably be anticipated that if local businesses have been involved in the development of the project the consultation would not raise any significant issues or objections. It would be the final stage in an ongoing process and, therefore, modifications would be relatively minor.

However, I understand that things do not always go according to plan. Clause 6(6), therefore, is designed to make it clear that there is flexibility in the process. If the proposals need substantial revision as a result of the consultation, Clause 6(6) requires the levying authority to publish a revised initial prospectus if the authority thinks it necessary or appropriate to do so. This would allow the levying authority to seek comments on the revised proposal, including funding, before finalising the details of the project and the supplement.

However, that will not always be necessary. To require a revised initial prospectus in all cases goes further than what will be needed in many cases and perhaps not far enough in a few rare cases. We should allow local authorities the flexibility to decide what is right for their area and for their proposal. To require a revised initial prospectus in all cases goes further than the usual consultation process and may not always be necessary.

As a revised version, rather than minor variations, of the initial prospectus will not always be necessary, it would be inappropriate to make this a mandatory aspect of the BRS process in the Bill. As I tried to highlight when we were discussing Clause 5, the BRS sets a minimum standard in terms of the consultation process. Other steps may well be appropriate depending on the specific circumstances of the project—in this case, substantial revisions to the prospectus following the consultation. Again, I feel that that should be left to local discretion and appropriate action.

I turn to Amendment 39. In carrying out the consultation, levying authorities will be expected to follow best practice, including publishing the results of the consultation. Therefore, since local authorities will be expected—and expect—to do that, the amendment is unnecessary.

Amendment 46A relates to the consultation arrangements in place for when a levying authority wants to vary a BRS in a way that is not highlighted even as a possibility in the prospectus, which would be a major and unprecedented change. Clause 10(2) and (3) requires that, in such cases, the levying authority sets out its proposals in a variation proposal document. This document will then be used as the basis for a consultation on the proposed change, mirroring the prospectus and consultation arrangements for a new BRS.

Amendment 46A would require levying authorities to set out in the variation proposal document what changes they wanted to make to the BRS chargeable amount. That is a fair enough point, but it is unnecessary for two reasons. First, a variation to a BRS will not always affect the chargeable amount; for example, an authority might want to extend the duration of the supplement without changing the chargeable amount. Secondly, and more importantly, the Bill already makes provision which the noble Lord is seeking. Where the chargeable amount is to change, Clause 10(2)(a) requires that this is set out in the variation proposal document.

Therefore, the Bill makes it clear that if the levying authority wants to alter the chargeable amount in a way that was not set out as a possibility in the prospectus, details of the change will need to be set out in the proposed variation document and therefore consulted on.

Amendments 63 and 66 relate to the consultation and scrutiny arrangements for the regulations that the Government will in due course make, assuming that the Bill is successfully passed. Amendment 63 would require a consultation on a number of regulations to be made. I draw noble Lords’ attention to the consultation paper that the Government published on Wednesday 13 May—I should say in response to an earlier point that the hard copies were made available on Thursday, and I am sorry if noble Lords did not lay their hands on them. The paper sets out the detailed policy proposals on how levying authorities will be expected to administer BRS, such as the accounting and ballot arrangements. It also sets out how the Government envisage that billing authorities might recoup the costs of collection. The consultation will be open until 19 August and will provide an opportunity for local authorities and businesses to comment on the detailed running arrangements for BRS prior to the laying of the regulations. That is a full three-month consultation process that will be formative in the role of business in working through those regulations.

Amendment 66 would require the regulations on the detailed ballot arrangements to be subject to the affirmative procedure, and the same for the regulations governing the appeals process for the apportionment of rateable value of partially empty properties.

The Bill as drafted is consistent with provisions already in place. I have spoken before about how we have tried to mirror the BID arrangements wherever possible for BRS, because people are familiar with them. The regulations governing the ballot process for BIDs are subject to the negative resolution procedure. The regulations on the apportionment of rateable value for partially empty properties for business rates in general—as opposed to BRS—are also subject to the negative resolution procedure. As BRS builds on the national business rates system, it makes sense that the regulations should be subject to the same procedure.

In terms of the content of the regulations on BRS, we have made our intention clear; the BRS will be consistent with the processes already in place for national business rates and BIDs, so there should not be any surprises. I am conscious that what we have been discussing is rather technical and detailed, and I am happy to meet noble Lords to talk about that process between now and Report, if that would be helpful.

As always, I am grateful to the Minister for her full and detailed reply. She is right that we will need to read and think about it and we will probably discuss it. We had some considerable exchanges on Amendment 38, and we concluded that we would receive a letter and consider it further in the light of that.

I did not understand the reply on Amendment 39. I think it was to the effect that local authorities are expected to publish the results of the consultation; therefore an amendment requiring them to publish the results of the consultation is not necessary. I do not follow that argument at all. It seems perverse. In my quite lengthy experience of consultation, including with my own authority, the one area where we most often fall down is not responding to the consultees about the results and the outcome of the consultation. So while good intention and good practice would always be to publish the revisions, that does not always happen in practice, whether by commission or omission. I do not understand that. Unless I misunderstood the Minister, which is quite possible because the infamous helicopters were back again, saying it is not necessary because it is expected is rather illogical. We will wait to read the debate and consider the rest of the amendments in that context.

I want to put on record something about the consultation document. I have not raised this before and I had not intended to raise it, but since the Minister has two or three times today referred to it being available on Wednesday, I shall raise it. In fact, it was e-mailed to me—I can speak for no one else—at 4.40 pm on Thursday afternoon. I have not yet received a hard copy. I have printed it off, which is fine. I am not complaining about that. It may well be that the hard copy got to the House of Lords Library by 4.40 pm on Thursday, but I suggest that not many of us were here to rush to the Library to collect it for our weekend reading. I put on record that it was 4.40 pm on Thursday afternoon, and the covering letter that came with it is dated Thursday; so let us be a bit clearer about that. I beg leave to withdraw the amendment.

Amendment 38 withdrawn.

Amendments 39 and 40 not moved.

Clause 6 agreed.

Clause 7 : Holding of ballot

Amendment 41

Moved by

41: Clause 7, page 4, line 32, at beginning insert “Subject to section 27(1A),”

As I shall eventually withdraw Amendment 41, I shall speak to the substantive amendment in this group, Amendment 62. First, I declare an interest as chief executive of London First, a non-profit-making business membership organisation.

There has been near unanimity across the House, and certainly from the Front Benches, on the importance of ensuring that the Bill provides funding to deliver Crossrail. There is a similar consensus that, whatever the merits of ballots for other projects, it is not needed in the case of Crossrail. As the noble Lord, Lord Bates, put it succinctly, and I believe accurately, during the first day in Committee:

“We are at one with the case for the Greater London Authority having the capabilities laid out in the Bill to raise funds … as its contribution towards Crossrail, to ensure that that major infrastructure project goes ahead, which we support fully. That has had a democratic test at the ballot box, and the people of London have expressed a view that is supportive of Crossrail.—[Official Report, 11/5/09; col. GC 306.]

Yet there seems to be some confusion about whether the Bill as currently drafted would allow the mayor to proceed with Crossrail, despite his success at the ballot box, without a further vote. There is similar uncertainty over what government regulations might provide this clarification and whether any such clarification would withstand judicial review.

My amendment seeks to provide absolute clarity in the Bill that there is no requirement to hold a ballot in relation to a BRS levied by the mayor for the purposes of raising money for a project where the project has begun before the Bill becomes law and when the BRS is levied on or before 1 April 2011.

I hope that the Minister will indicate the Government’s support for this simple but effective measure to give certainty to the Mayor of London’s power to meet his mandate and the Government’s commitment to the funding and delivery of Crossrail. I beg to move.

I support these amendments, to which I have had the honour of putting my name. I very much support and echo the sentiments expressed and just want to make two points in addition to those that have already been made clearly and effectively by the noble Baroness, Lady Valentine.

There is a strong sense of commitment from the business community to the whole Crossrail endeavour, and there is no doubt that it will bring substantial benefits to that community across London. There have already been substantial delays. Therefore, if there is any ambiguity in the Bill which could be open to legal challenge, it is far better that it is dealt with in the weeks surrounding the Committee and Report stages of the Bill rather than be played out at length in the courts.

It is clear that Crossrail has been studied and scrutinised by the Department for Transport and the Treasury for many years. My noble friend Lord Jenkin of Roding referred to it being in his consciousness for 20 years, and I think that it has been actively considered over a long period. Crossrail was included in the Government’s 2005 election manifesto, and it has been scrutinised by Parliament on two occasions—through the Crossrail Act 2008 and the Finance Act 2008. Crossrail is huge in scale—indeed, it will qualify as a nationally significant infrastructure project under the Planning Act 2008—and it will deliver benefits that will accrue way beyond London. I think that those are compelling reasons for accepting the modest measures proposed in the amendment.

The one argument that the Minister could put forward, and on which I take this opportunity to express a view, is that other business rate supplement schemes might be caught by the provision of the 2011 start date, although I do not think that that will be the case. In the survey that we discussed in debate on an earlier amendment, it was pointed out that, of the 96 chief economic development officers consulted, none had any immediate plans, and I think that by the time all the consultation has taken place, we will be considerably beyond 2011.

This initiative is clearly needed and welcomed because it gives rise to a major infrastructure project at a time when the City of London most desperately needs it. It was the subject of a ballot—namely, in the mayoral elections, when Mayor Johnson made it very clear that it was one of his key ambitions. Therefore, we should do anything that we can do to ensure clarity in the process and to speed up the delivery of this important project.

I am grateful for what noble Lords have said. It shows once again what a cross-party initiative Crossrail is and how much cross-party support is committed to it. That goes as much for what Members in another place as well as your Lordships have said. As the noble Lord, Lord Bates, said, it is a project that will bring significant benefits to London and the south-east. I am grateful to the noble Baroness, Lady Valentine, for bringing forward her amendments and arguing that the project is vital to the economic development of London. It has certainly been a long time in the planning stages and it is good to know that the first physical stage of construction started last week.

The key to the noble Baroness’s amendment is that the financial package that will support Crossrail includes the BRS contribution. That is well below the one-third threshold that the Bill requires for a ballot, but, nevertheless, the amendment seeks to give the Crossrail project even greater certainty against challenge or arguments for a ballot, which, as the noble Lord, Lord Bates, said, would in turn import possible delay and risk into the project. We clearly want to avoid that; we need as much certainty as possible.

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 62. She has already anticipated me asking her to withdraw her Amendment 41, which is unnecessary to the correct functioning of Amendment 62, which we support. I hope that that will be welcomed by the Committee.

Amendment 41 withdrawn.

Amendment 42 not moved.

Amendment 43 had been withdrawn from the Marshalled List.

Clause 7 agreed.

Clause 8 : Approval by ballot

Amendment 44 not moved.

Clause 8 agreed.

Clause 9 : Regulations about ballots

Amendment 44A

Moved by

44A: Clause 9, page 6, line 5, at end insert—

“( ) Nothing in subsection (3) is to be taken as requiring a lower-tier authority to accept a delegation or to prevent it accepting a delegation on conditions including as to the cost of the exercise of the function.”

I shall raise a number of, I hope, short points. The first amendment in the group would amend Clause 9(5) to ensure that a levying authority could not delegate if the billing authority did not want to accept the delegation or to accept it only on certain terms; for instance, as to the cost of whatever the function is. I had in mind in particular protecting both the London boroughs and all the so-called “second-tier” authorities if the levying authority were to be able to impose a function in a way which the billing authorities found unacceptable. I may be told that it is implied that the delegation would have to be accepted. My amendment is to probe that and have it placed on the record. If I am told that it is not implied, I may want to come back to it.

Amendment 45 would require consultation about variations to extend to the billing authorities. It seems to me that the billing authorities as well as the rate payers have a stake in the variation, because of the administration of the variation, which could be required by that variation.

I wondered whether to withdraw Amendment 57, but it will give the Minister an opportunity to confirm that the March date is a date normally applied for the national non-domestic rate. I tabled the amendment to probe the need to ensure adequate time for the billing authorities and to give the Minister an opportunity to explain how the supplementary rate fits in with the NNDR. I believe that under the current legislation the Secretary of State calculates the NNDR multiplier and the small business NNDR multiplier and serves a notice on the billing authorities, “as soon as is reasonably practical” after doing so. I am keen to have confirmation of what the statutory position is as well as what the practice is at present. Amendment 57 reflects my perhaps greater concern about the imposition of the BRS mid-year. It would require at least 30 days’ notice in order for all the administration to be put into place. Thirty days would not by any stretch of the imagination be a long period.

Amendment 64 would require regulations—this is a London point—to be published in draft within a month after the commencement of the Act and to be made not later than 30 September 2009. My noble friend spoke in the previous Committee sitting about the concern of the London boroughs, expressed to us through London Councils, about the burden on the boroughs. I make it clear that the 30 September date comes out of my head; it is my probing of this. I would not like the Government to think that they can relax because London Councils is only seeking 30 September; that is not the case. The consultation on the document to which reference has been made ends on 19 August. There is not a lot of time to put the new arrangements into place. The London boroughs will have to set up systems, and the systems are going to have to go live in a year when the boroughs have to contend with revaluation of non-domestic rates, a new transitional relief scheme and the deferral scheme for 2009-10 NNDR bills announced by the Treasury in April. It really is important that they are given every opportunity to put the arrangements into place, which argues for decisions that are as swift as possible. I beg to move.

These are all sensible amendments and we are happy to support them. A couple of issues that they raise could perhaps be responded to. First, when will the regulations for Crossrail, which have been in the pipeline for some time, come out? Is there any indication of when they will be available? I ask that in the context of Amendment 64. Amendment 57 is particularly sensible in a time of economic uncertainty, and we support it. The extension of notice period also very much fits in with that. With that proviso, we are happy to give our support.

A number of amendments in this group explore the relationship between the levying and billing authorities. That will clearly be a key element in the smooth running of any BRS project in two-tier areas.

Amendment 44A raises an important issue about that relationship, which we quite appreciate. It provides that billing authorities need not accept a levying authority delegating to them the function of running a BRS ballot. It allows a billing authority which does accept the delegation of that function to impose conditions on that acceptance and to charge for running the ballot. First, I certainly agree with the spirit of the amendment and hope to show the noble Baroness that it is not strictly necessary.

A levying authority simply could not force a billing authority to undertake ballot functions other than by agreement. In the consultation paper, which we publish this week, we are inviting views on whether levying authorities should have powers to delegate the function of running the ballot to one or more of the billing authorities in its area. If stakeholders feel that there should be some flexibility for levying authorities to decide how to run ballots, this would be agreed locally. A levying authority could not force a billing authority in practice, nor could it rely on Clause 9 to do it. In the consultation paper, we also address the issue of any costs that might be incurred by a billing authority in running a ballot for a levying authority. Our view is that this is something that levying authorities and billing authorities should be able to reach agreement on. This is clearly now a matter for consultation, and we will be interested to see how stakeholders respond to those issues. Clause 9 ensures that levying authorities have the power not to run the ballot themselves. However, it does not force billing authorities to undertake those functions.

Amendment 45 would require a levying authority to consult the billing authorities in its area if it wanted to change an existing BRS in a way that was not anticipated as a possibility in the prospectus. I agree with the noble Baroness that it is important that all those who will be affected by a variation in an existing BRS should be able to have their say about the proposed changes. Again, I reassure the noble Baroness that provision is already made for this. Clause 10(5) makes it clear that, when consulting on a proposed variation, Clause 6 applies in the same way as it does to a consultation on a new BRS. Therefore, the levying authorities are already required to consult lower-tier authorities in their area if they want to propose a variation to an existing BRS.

Amendments 57 and 57A are about the notice that a levying authority must give to the billing authorities in the area requiring them to commence billing. I assure the noble Baroness that she was right in what she said. Amendment 57 is concerned with BRSs that are to be billed for with effect from the beginning of a financial year. Currently, the levying authority will need to serve notice on billing authorities before 1 March if they want to levy the supplement from the start of the annual billing round on 1 April. That means requiring levying authorities to provide notice before 1 February, a month earlier. Amendment 57A, as I understand it, would require a levying authority to give a minimum of 30 days’ notice to billing authorities if they want their BRS to be first levied part-way through a financial year.

I absolutely understand the concern that billing authorities must have adequate notice of a BRS. Obviously they need to ensure that they have time to make the necessary arrangements.

The 1 March deadline for BRS, which will be billed from 1 April was, as the noble Baroness suggested, chosen for consistency with the upper tier authority’s timetable and that of the GLA to issue its council tax precepts for the forthcoming year and within the budget-setting process. The rationale is to ensure that the arrangements dovetail with the existing administrative arrangements as far as possible. In that way the administrative burden on levying and billing authorities should be minimised. It will also avoid potential confusion that would be caused by having different timetables for different preparations needed before the commencement of the financial year.

Obviously, if the amendment were accepted all the benefits of consistency would be lost and the BRS would be running to a different timetable. On top of that, the amendment could also cause problems in the short to medium-term. The GLA, which intends to levy a BRS from 1 April 2010 as part of the funding package for Crossrail, could well face difficulties in meeting the timetable proposed by the amendment. The timetable is particularly tight considering that before the levying authority can notify the billing authority it will have to have prepared a prospectus, completed the mandatory consultation and revised the proposals as necessary. To shorten it by just a month would put additional pressure on the timetable. That is unnecessary, given the longer-term considerations of marrying preparations needed for the start of the financial year.

The issue with a BRS that is to start part-way through a financial year is slightly different. For that we have not put in place a specific timetable for a notice that must be served for billing to commence. Again, it is consistent with the wider framework of the Bill, but we expect that billing mid-year for BRS will be the exception, not the norm. It is right that we allow for flexibility but it will lead to a greater administrative burden, not just for billing authorities but for business as well. Because of that the timetable has to be agreed between the levying authority and the billing authority. The approach of not prescribing a timetable fits in with our general policy of allowing as much discretion as possible, which is the right approach here.

Amendment 64 concerns the consultation arrangements on the regulations covering the collection and enforcement of BRS. It would require consultation on the draft regulations to start within one month of the commencement of the Act—assuming it reaches Royal Assent—and to be made no later than 30 September 2009. I understand why the noble Baroness has posited her argument and her concern that there should be adequate consultation on the arrangements for collecting and enforcing BRS. The final arrangements also need to be in place in good time to enable levying and billing authorities to complete the necessary preparations.

In our consultation paper on Wednesday we set out our proposals on collection and enforcement, which will later be reflected in the regulations made under Clause 21. Consulting on the policy as opposed to the draft regulations provides us with greater flexibility to set out the various options and their respective pros and cons. Frankly, I think that that is the key to a better consultation, and certainly one on which the partners feel they have more influence. It is more effective than if we were simply presenting what would look like near finalised regulations. It is therefore an important opportunity for billing and levying authorities, business and other partners to consider the proposals in detail and to provide feedback before the regulations are laid before both Houses for consideration.

The noble Baroness said that the timetable was very tight and I agree that it is unnecessarily restrictive. The consultation will give billing and levying authorities a good indication as to how collection and enforcement arrangements might work, albeit subject to consultation. Obviously, we appreciate that levying authorities will want to have administrative arrangements at the earliest opportunity, but I cannot give noble Lords a definitive timetable for laying the regulations. Clearly we want them in place as soon as possible, and we shall do that in the autumn, which is as much as I can say at the moment. The noble Lord, Lord Bates, asked about the regulations for Crossrail, and I can tell him that we are currently aiming for mid-October. That is a more specific timetable because much more preparation has already gone into them. We aim to have the general set of regulations as soon as possible after the consultation period has finished in the autumn.

Before the noble Baroness, Lady Hamwee, withdraws the amendment, while we may take some exception, as I did earlier, to the way this consultation paper has reached us, it is right to put on record that its late publication is causing considerable dismay to local authorities. I hope the noble Baroness understands that. The note that I have had this morning from London Councils—I repeat, I am one of its joint presidents—tells me that it is disappointed and frustrated that the DCLG consultation, as issued last week after much delay, is not the draft regulations. It had been led to expect that it was going to consult on the draft regulations, but it is only,

“draft proposals on the ballot and administration arrangements”,

and, as such, is the policy relating to the regulations rather than the regulations themselves. The note goes on to say that while the document is welcome, it still is not a substitute for seeing the detail of the regulations.

The noble Baroness said that we shall not receive the full regulations until October; did she say that?

The early autumn; September or October. I insist on behalf of the London boroughs that they want to see these regulations as swiftly as possible.

On a minor point, we asked about these a week ago and were told that they would be published. I have not had a chance to read the documents. Indeed, while I was waiting for the hard copy, I ran off the 49 pages on my printer, which is not a very fast one, this morning. London Councils says that the consultation was published only last Thursday,

“not allowing much time to assess how the scheme is proposed to work, or giving all the detail for the scheme”.

It continues:

“This level of detail is vital to the success of the first BRS that will be raised—that for the Crossrail scheme in London”.

There is considerable dissatisfaction with the way in which this matter has been handled. I hope the Minister is under no illusions about that.

What I said in response to the amendment was sincerely felt. We have never said that we would publish the draft regulations, because we thought that publishing the policy would give London councils and all councils, in this three-month period of consultation, much more opportunity to decide for themselves what the regulations would contain and how it would work. I take the point that London Councils clearly wants to discuss detail, and I shall be happy to set up a meeting between its representatives and my officials. We can then talk about the consultation paper and how the consultation process might proceed. Would that be helpful?

Again, as I have raised the point on the consultation paper, that is a very helpful suggestion and I will see that the officials in London Councils are aware of that and that they follow it up as swiftly as possible. They cannot administer this scheme within what the noble Baroness said was a very tight timetable unless they have enough information to make the detailed preparations. At the risk of quoting a hackneyed phrase, the devil is in the detail, and that they have not got yet. I welcome the suggestion of a consultation; I hope it will relieve some of their anxieties and perhaps help the Minister to produce a swifter scheme.

It is indeed a helpful suggestion, and I thank the Minister for that. On the timetable, of which we now have some bits of the jigsaw, it will clearly not be possible to meet 30 September because 40 days from 19 August takes us to about then. I have noticed that spring comes later in the House of Lords than in much of the rest of the world, as does autumn, which too often runs well into November.

I am grateful to the noble Lords who have spoken. On the other amendments, I was seeking the concurrence with the NNDR. I certainly do not want to complicate the process. I realise that if my amendment were to be included, I could cause a fit among the officers at the GLA for whom I have much respect. I have no wish to complicate their lives, because I know how difficult it is to fix meetings to make decisions.

Going backwards, on the costs of delegation, I suppose that the possibility of refusing a delegation covers the point if the costs cannot be sorted out. I am grateful to the Minister for that. I beg leave to withdraw Amendment 44A.

Amendment 44A withdrawn.

Clause 9 agreed.

Clause 10 : Variations

Amendments 45 to 47 not moved.

Clause 10 agreed.

Clause 11 agreed.

Sitting suspended.

Clause 12 : Rateable value condition

Amendment 48

Moved by

48: Clause 12, page 8, line 21, at end insert—

“( ) After the revaluation of rates in April 2010, the amount prescribed by regulations must increase by the same percentage as the percentage increase in the average rateable value for a hereditament in the 2010 Rating List compared to the 2005 Rating List.”

This is a minor, probing amendment to test where the Government stand in relation to the £50,000 threshold for the business rate supplement. What is going to happen is that, as rateable values increase, as we hope they will, particularly as the country climbs out of recession, and as prices increase, more and more businesses will come within the reach of the £50,000 threshold. The Minister has made clear on a number of occasions that the desire is not to see small businesses unduly impacted by these measures and to see them exempted. Therefore, we want to know what position the Government are thinking of in relation to upgrading this threshold when it comes.

On a specific technical point, it would be good if the Minister would comment on the position of those businesses which have been exempt this year because they are under the £50,000 threshold. Next year, there is the revaluation. Does that mean that those businesses that are exempt this year will also be exempt next year? Clearly, businesses next year are going to be in for a very tough time when it comes to business rates. The 3 per cent deferral in the increase in the business rates, which was due to be levied on 6 April this year, has been moved to next year. There will be the revaluation itself, community infrastructure levies, congestion charging and workplace parking levies. A whole range of things are being talked about that will hit businesses just as they are potentially struggling to emerge from this very deep recession. I wonder whether the Minister, who has been in generous mood to the Committee this afternoon in giving way on a number of points, might like to extend that generosity to hard-pressed businesses by giving a positive response to this minor amendment. I beg to move.

The noble Lord has sketched out the context in terms of the difficulties that businesses are facing, like the rest of the country. I was pleased, for example, that we were able to deal with the potential 5 per cent increase on business rates. Businesses will be able to pay a 2 per cent annual increase in 2009-10 and the remaining 3 per cent over the following two years. That will help to smooth out rates payments.

This is a useful amendment that enables me, I hope, to reassure the noble Lord. I will deal with the specific question on the threshold first, and then say a little about the amendment because it raises some interesting questions. I understand the noble Lord’s concerns that if the rateable values increase—on the basis of past revaluations, it is more likely that they will increase rather than decrease—then the threshold of £50,000 that was committed to in the White Paper will protect fewer businesses than we might expect based on current rateable values; that is, more businesses will find themselves over the threshold. They might technically find themselves brought within the scope of BRS on that basis.

I stress that levying authorities have the freedom to provide additional safeguards for business. The baseline is £50,000. If levying authorities are concerned about the impact on business on the basis of the next revaluation, they are sensible enough to know that the way to deal with that is to raise the threshold above £50,000. They can do that to exempt businesses that have come into the net as a result of revaluation. They will also be able to stagger the supplement—for example, setting the BRS so that premises with rateable values just above the threshold will attract a lower supplement than premises with rateable values that far exceed the threshold. They have the scope to do that within the 2 per cent. Within the terms and spirit of the partnership that they are trying to construct around BRS, there is scope for local authorities to be flexible and proportionate about what they are trying to do.

The amendment itself raises interesting questions. One reason that we cannot accept it is that tying the threshold increase into a national hike, as the amendment implies, does not deal with the serious variability that we get in our local communities and the need to protect those communities, particularly smaller businesses. Based on the 2007 figures, we know that more than 90 per cent of non-domestic properties will be exempt from BRS, and that in 2010 rateable values will change to reflect the movements there have been in the property markets since the last revaluation in 2005. There will be variation between regions and sectors: in some places properties will face an increase in their RV; others will see a fall. For rate payers who will face a significant rise in their rate bills on revaluation, we have the transitional relief scheme which staggers increases over a period of time.

We need to balance three key issues: the interests of business; the need to allow local areas to raise meaningful levels of revenue; and the need to allow flexibility so that local needs can be taken into account in any BRS. At the current time, the methodology set out in the Bill around the £50,000 threshold gives us that certainty. It also gives us the important local variability which will help the levying authorities do what is right for their areas.

I am grateful for the Minister’s reply. I am obviously disappointed that the businesses which are exempt this year will not be exempt next year but, nevertheless, I accept the explanation that has been given. I beg leave to withdraw the amendment.

Amendment 48 withdrawn.

Clause 12 agreed.

Clause 13 agreed.

Clause 14 : Chargeable amount: supplementary

Amendment 48A

Moved by

48A: Clause 14, page 11, line 5, at end insert—

“(8A) No later than five years after the date on which this section comes into force and, after then, at intervals no shorter than five years, the Secretary of State shall publish a report following a review carried out by him of the upper limit of the multipliers set out in subsections (6) and (7).

(8B) When carrying out a review under subsection (8A), the Secretary of State shall consult—

(a) levying authorities;(b) such representatives of local government as appear to him to be appropriate; and(c) such organisations representing businesses as he thinks fit.(8C) If, in a report published under subsection (8A), the Secretary of State concludes that the upper limit of a multiplier should be varied, he may by regulations amend subsections (6) and (7) by varying the upper limit.”

I shall speak also to Amendment 66A. At Second Reading, I declared my interest as president of the Local Government Association and I raised the question of the limit on business rate supplements which local authorities would be permitted to levy. This limit is currently clearly specified in the Bill at 2p in the pound. This is half of the limit of 4p in the pound which was recommended by Sir Michael Lyons in his independent review of these matters in March 2007. The amendments accept the Bill’s 2p limit at this time, rather than pushing for the Lyons recommendation. All the LGA is seeking is a requirement on the Secretary of State to consult at five-yearly intervals on whether the limit is still appropriate, with the opportunity, if it is not appropriate, to change the limit. This would mean that primary legislation would not be needed if any change was desired.

Local authorities work closely with their local businesses and understand and share concerns about placing excessive burdens on business during the current recession. The noble Lord, Lord Tope, noted that some people might fear that councils are sitting waiting to levy the maximum supplements as soon as they can. In reality, a recent survey by the Chief Economic Development Officers’ Society did not find a single local authority that is planning to use the power to apply an additional supplement during the recession.

Amendment 48A specifically provides for consultation with local authorities and the business sector. If, following this consultation exercise, the Secretary of State concludes that the upper limit should be varied, then it could be changed by regulation. Changes in the limit would still require an affirmative resolution, so there are further safeguards.

The amendment gives the power to vary the limit, which means it could be reduced as well as increased. I would not pretend that in sunnier economic times in the future local authorities might not seek to make the case for setting a higher limit that would provide extra revenues that could make a real difference; after all, the current limit restricts any extra revenue to a maximum of less than 5 per cent of the total business rate. But the Secretary of State could use the provision to reduce the limit, and I hope that provides comfort to any noble Lords who are nervous about these amendments. I beg to move.

There is merit in this proposal. I am a vice-president of the Local Government Association; I am not sure that I have declared that interest before. However, it gives me an opportunity to repeat what I said last week: we will need before Report to look at a more general amendment to the Bill to give the Government a clear duty to review and the power to make changes by appropriate subordinate legislation rather than, as the noble Lord, Lord Best, has said, having to come back to primary legislation for changes.

Various items here have been suggested for review. However, after perhaps five years—I suggest that as a possibility—we really need the Government to come back and review the whole scheme. The amendment would require careful drafting so as not to give complete carte blanche to sweep it all away and start again through subordinate legislation. However, that seems a better way of proceeding than having a series of piecemeal reviews of different aspects of the BRS at different periods.

I hesitate to disagree with my distinguished colleague and noble friend Lord Jenkin, and with the considerable expertise that the noble Lord, Lord Best, brings to these matters. However, I must. It follows through our general theme of concern about the burdens that are being placed upon the business community. The sum of 2p may seem inconsequential, but it is the equivalent of £750 million nationally—around 5 per cent of the total to be raised.

It is in the nature of these things that whatever the top level, people tend to claim up to the maximum in any walk of life. Therefore, to remove that barrier from 2p and to give the Secretary of State the power to vary the upper limit up to 4p is giving too much at this stage.

We are certainly supportive of the review of the scheme’s progress. A radical new tool is being proposed. We have our misgivings about it outside London, but it is none the less appropriate to seek its review. As well as the Local Government Association having argued for it, business organisations such as the CBI have made representations that we should seek to retain the current 2p level—indeed, not even 2p. The point is that there ought to be gradations and a scaling before somebody moves all the way up to 2p, depending on the size of the business.

Timing is also critically important. Certainly, economic forecasts point to our being in a period of sustained economic difficulty for some three to four years. Therefore, the idea that this power of flexibility could be introduced by the Secretary of State just as businesses are emerging from that would be regarded by us as unhelpful.

Finally, one of the things that we have always been suspicious of, with the reduction of local authority business growth initiative funding from about £1 billion to £250 million or something of that order, is that this is not additionality, but we are seeing the already hard-pressed business community being asked to supplement a gap in funding.

We support the amendment. The noble Lord, Lord Best, will not be surprised because I have made the same points at different stages. It is a Bill for the long term. If local authorities are to be trusted in the way in which we have been discussing, they should be trusted to this greater extent. It seems a little perverse to put—I was about to say a legislative block, but it is not in legislation; it would require another primary legislative building block to extend the scope of the BRS.

That was a helpful debate to tease out some of the arguments around the amendment. I understand that it wants to make provision for the Secretary of State to vary the upper limit through regulations and make it possible to increase or decrease the level of the supplement depending on the state of the economy. I can see that that has some attractions, but I have an argument against it.

In an earlier debate, I set out the provisions in the Bill and the way in which they need to balance safeguards with the ability to raise useful sums of cash. The 2p limit guarantees businesses the maximum BRS that they might be expected to pay. Examples of the kinds of revenues that can be raised are set out in paragraph 3.4 of the White Paper. The noble Baroness, Lady Hamwee, mentioned the long term, and indeed, Crossrail is an example of a long-term project. We know that such major construction projects will take years to complete. The amendment raises the possibility that the maximum rate could be changed and, by implication, increased, which introduces a significant level of uncertainty for business and the levying authority.

I hear what the noble Baroness says, but certainty is important in constructing sustainable partnerships. Under the Bill as drafted businesses can be sure of the maximum BRS bill that they may be expected to pay. The amendment would reduce that certainty. Yes, it would be there for the next five years, but what about the following five years or the five years after that? Levying authorities need clarity on how scenarios would be handled. It is possible that transition arrangements will have to be made, but that all adds to levels of uncertainty that we do not need in the system.

I say to the noble Lord, Lord Best, that when it comes to reducing the 2p rate, as the noble Lord, Lord Bates, pointed out, we have allowed scope within the levying arrangements that takes care of that point. Put simply, the levying authorities can set up a levy to the maximum of 2p, and within that they will have the discretion to vary the supplement as they see fit. They can certainly propose a lower supplement in their initial prospectus, and vary it in response to the consultation. That is a better way forward as it brings flexibility, negotiation and some certainty. Despite the fluency of the noble Lord, Lord Best, and the support received from the noble Baroness, Lady Hamwee, I and the noble Lord, Lord Bates, are at one on this amendment. I cannot accept it.

Can the Minister tell us whether there is any difference conceptually or philosophically between the uncertainty that she ascribes to this amendment and the uncertainty that all businesses outside London currently feel as they do not know whether they will be subject to a 2p rate once the Bill is passed?

Each BRS as it comes along will have to subscribe to the Act—as I hope it will then be. An authority will be able to make its own decisions on what it needs and how its partnerships will function on that basis.

I make two general points in defence of the amendments. They are about giving local authorities greater freedom to be the place shapers for their area; they are about the politically consensual move towards decentralisation, devolution and localisation; they are about the opportunity that local authorities might have in the future to do more without central government dictating exactly how they are funded. That is the philosophical base to the amendments. It is also worth pointing out that, increasingly, local authorities are acting as partners with local businesses. That sense of mutual mistrust which existed in the past is evaporating, I am pleased to say, in many areas. Protecting local business from local government is perhaps no longer the priority that it might have been years ago. However, with the strength of the alliance that is opposed to the amendment, I fear that I must withdraw it.

Amendment 48A withdrawn.

Clause 14 agreed.

Clause 15 : BRS relief

Amendment 48B

Moved by

48B: Clause 15, page 11, line 19, leave out from “BRS” to end of line 20 and insert “shall apply in relation to BRS reliefs that are no less favourable to ratepayers than the most favourable reliefs applied by the relevant billing or levying authorities”

Clause 15(1) states that a levying authority can apply,

“such reliefs … as it thinks appropriate”.

My amendment seeks to pin down the question of reliefs. It did not occur to me until reading the clause that different reliefs might be applied to BRS from those applicable to NNDR in the same area. I do not suppose that my drafting is particularly good, but I am seeking to understand whether it is expected that the BRS will be fully in line with the NNDR and the reliefs that apply and, if so, whether it is required. I beg to move.

I rise to support the noble Baroness in her Amendment 48B but also to speak to amendments standing in my name and that of the noble Earl, Lord Cathcart. They are probing amendments which give us an opportunity to put some real concerns on record. The amendments deal with the sections of Clause 15 relating to the application of relief and would impose a requirement to grant relief for empty property in this category. In the 2007 Budget and without proper consultation, Gordon Brown peeled back the empty property rate relief for commercial and industrial premises. The rise in empty property tax raised an estimated £950 million net in extra tax in 2008-09. There was no offsetting reduction in the rates elsewhere. The tax changes came into effect in April 2008, just as the economic downturn was starting to bite.

The tax rise is particularly harmful in a recession, as firms are unable to rent out vacant properties due to a lack of demand in the economy. There are many cases of this up and down the country. It is axiomatic that a policy which may have seemed appropriate to the then Chancellor in the 2007 Budget is entirely inappropriate during the downturn. Last week, I walked around an office building in Darlington where every single unit used to be occupied. The business there was very good and well maintained, and the office space was available on a kind of flexible leasing basis. You used to be able to walk along all three corridors and find the place bustling with businesses. Now, in that same business building in Lingfield Point in Darlington, many units are completely empty. As a result, the owners are carrying the extraordinary additional burden of the empty property rate.

Although this does not apply in the case that I have just mentioned, and draconian as it may seem, many people are knocking down entire sheds, as they are known in the commercial property world, to avoid paying that rate. That is happening in much the same way as I suppose was the case when the window tax was levied and people started bricking up their windows. The fact that landlords take such draconian action indicates just how near to the bone many of them are with their business premises at this time. I think we need to put on the record just how dangerous the decision to abolish empty property rate relief was and the damage that it is doing. We have rehearsed some of these arguments before but I want to put them on the record. We talk about raising additional funds through the business rate supplement but this will be entirely additional.

In the previous debate, I referred to the fact that business growth initiative funding has been cut by almost £700 million. Here, we see empty property rates raising an extra £950 million. It seems very likely that here we are seeing already hard-pressed businesses being asked to shoulder the burden of additional taxation to cover a gap in the Government’s finances. That point needs to be put on the record.

In the 2008 Pre-Budget Report, the Government announced that they will increase the threshold to £15,000 for 2009-10 only; yet they are merely exempting some small firms from this tax for one year and continuing with the tax hikes in 2010-11. The reduction in revenue from the temporary threshold increase is only £185 million in 2009-10. This compares with a previous forecast of £900 million in 2009-10—hence, the net increase from the change in empty property rates is still an additional £715 million.

I think that the Government have recognised how disastrously poor the timing of the abolition of the empty property rate was, and they have taken steps, as best as they are able when they are running a £170 billion deficit, to try to recover some ground. However, it is too late for many businesses that have gone under and many landlords are taking the draconian steps that I mentioned earlier. The point of tabling this probing amendment was to provide an opportunity to put on the record that, when we introduce these charges, they impact on real businesses in a very real way. It cannot be assumed that boom and bust has been abolished because bust may be with us for some time. We hope not—we pray not—but it may well be. It is therefore absolutely right that we should be cogniscent of the impact, intended or otherwise, that such measures can have upon businesses in this country. I beg to move.

These are two very important amendments and there have been two powerful arguments in explication. Amendment 48B seeks to ensure that the relief given for BRS is no less favourable than the relief given for the national business rate. We were certainly at pains to ensure that. In developing our proposals for BRS, we were particularly keen that the overall approach to BRS mirrored that for NDR. It is already provided for in Clause 13 and, to use the noble Baroness’s language, means that if a rate payer receives relief on their rates bill, that same level of relief will be applied when assessing liability to BRS. It is fully in line with NDR. I hope that reassures the noble Baroness on that point.

We have designed the Bill so that the provision applies to those ratepayers in receipt of small business rate relief, charity or CASC relief, rural rate relief, discretionary rate relief or hardship relief. Those ratepayers will receive the same percentage reduction in their BRS bill as they receive from their rates bill. For example, if a registered community amateur sports club—I am sorry the noble Lord, Lord Moynihan, is not in his place because I would like to see his face light up when I say this—is receiving 80 per cent mandatory relief from business rates, the club will similarly be entitled to an 80 per cent reduction in its BRS liability. I hope that will be helpful on the record.

On Amendments 49 and 50, I listened hard to what the noble Lord said about the significance and impact of empty properties and empty shops, particularly on the young, and I quite understand the case that he is making. We should certainly do all that we can to support businesses during the current recession. I shall not go into the ways in which we have tried to do that, but an enormous sum of money has, in different ways, gone into supporting businesses, including the construction industry, during the current recession. It is on that basis that we are temporarily increasing the threshold at which the owner of an empty property becomes liable for business rates. This financial year, empty properties with a rateable value of less than £15,000 will be exempt from business rates. That is an estimated 70 per cent of empty properties. This is best targeted at helping those small businesses manage short-term pressures which are due to the difficult property market conditions.

The reasons which led us to make the changes we did are still right in principle. It is right to charge rates when properties stand empty. It increases incentives and energy to re-let and reuse and it avoids subsidising owners of empty properties. The noble Lord will be disappointed, but a blanket exemption from BRS for empty properties is overly prescriptive. We need to ensure that we are consistent in the freedoms and flexibilities that we are offering local authorities.

The Minister said that the idea of empty property relief was to get owners of properties to re-let the properties rather than let them stand empty. Surely she would acknowledge that in the present economic climate that is not an option. The idea that it is not applicable for businesses with a rateable value of over £50,000 does not stand if the test is the ability to re-let. I am sure the owner of Lingfield Point in Darlington would love to have no empty properties whatever within his facility, but he just cannot help it. These businesses are stopping trading or going into receivership and therefore the rules designed in 2007 simply do not apply in the current environment, nor probably for the foreseeable future.

I certainly accept the point that it is difficult in the current climate; I have no argument against that. That is why for this financial year those properties with a rateable value of less than £15,000 will be exempt. That is why it captures so much. The noble Lord is right that these concerns are very difficult at the moment.

I may be able to reassure him, because the current draft of the Bill leaves it to the levying authorities to determine whether liability for BRS should extend to the empty properties in an area. They have that discretion. That will be part of the negotiation that is possible between the levying authorities and local businesses. It is very much appropriate, not least in the areas that the noble Lord is so familiar with and has been describing, that the decision should be made at local level. The right approach will depend on the specific nature of the project and the local area. The local authority can, if it so wishes, exempt empty properties. The safeguards in the Bill apply equally both to occupied and unoccupied properties. Both will benefit from the £50,000 threshold. Both will benefit from the 2p upper limit. I would have thought that it would be possible—I will have to check this—to have a different rate for empty properties. It may be possible to vary the rate. If the noble Lord will allow me, I will come back to him on that. I am not certain of my ground there.

If a levying authority wants to levy its BRS on the owners of empty properties, they will certainly have to be consulted in the same way, and if it goes above a third of the total cost they would be entitled to vote. Crucially, just as we have mirrored the reliefs of BRS alongside NDR, we are trying to establish consistency wherever we can, and this approach mirrors our approach to NDR. Rates are now paid on occupied and empty properties, but we are leaving it to the discretion of levying authorities to decide in this case whether to exempt owners of empty properties.

I hope on that basis there will be some comfort for the noble Lord in relation to his amendment.

I am still a little puzzled. I understand that the reliefs are captured by the formulae in Clause 13, but then why is Clause 15(1) necessary? It says that a levying authority may apply such reliefs as it thinks appropriate. Does that mean that it could apply greater reliefs than those which will already have been taken into account in reaching the cash amount under Clause 13? Does it mean that it can make up its own local reliefs? I remain a little puzzled. Can the noble Baroness help?

As I understand it, that allows local authorities to move the threshold above £50,000 and allows the BRS, for example, to be levied at less than 2p. Those reliefs are being referred to in that—

With respect to the Minister and her officials, who have just given her that bit of prompting, that is not a relief. That is the basis for calculating the BRS threshold. Perhaps I just have to contain my puzzlement, but I wonder whether I might discuss this with the Minister after today.

I am happy to do so. I am sure the language is sufficiently flexible for it to be appropriate. I take the point that the noble Baroness is making, and I am happy to discuss.

Amendment 48B withdrawn.

Amendments 49 to 50 not moved.

Clause 15 agreed.

Amendment 50A

Moved by

50A: After Clause 15, insert the following new Clause—

“Power for levying authority to cancel BRS

A levying authority that imposes a BRS on non-domestic ratepayers in its area has the power to cancel that BRS in response to a request from the non-domestic ratepayer as it considers appropriate.”

I shall be brief. The amendment relates to trying to secure some specific responses from the Government. If a business that is currently liable to the business rate supplement in the circumstances that have been outlined were to cease trading and still owed business rate supplement, what mechanism is in place to deal with that? Will the local authority simply line up as a creditor along with other creditors to the company? If a major retailer, say a B&Q superstore or a Woolworth’s, is on the brink, is there flexibility to ease the situation? I merely seek to elicit information from the Minister on the position. I beg to move.

I have added my name to Amendment 61B in this group referring to the provision allowing the Secretary of State—or the Welsh Assembly—to cancel a BRS if it,

“thinks that a levying authority has … acted in a way that is materially inconsistent with information provided by it”.

My amendment would except,

“minor or incidental information on which ratepayers could reasonably be expected not to have relied”.

I expect that the Minister will tell me that my concern is met because the two national authorities can simply decide if it is minor or incidental information and would not exercise their power to cancel, but I should be grateful if the Minister would confirm that I have understood that correctly.

I shall start with Amendment 50A, which seeks to put beyond doubt that when a ratepayer requests it, the levying authority may cancel its BRS. I am sure that the noble Lord knows that that is already covered in the Bill. There is nothing preventing a levying authority stopping a BRS early in a controlled way. For example, it can choose not to proceed with a later stage of the project in the light of representations received. That would amount to a variation of the BRS and, as we have previously discussed, depending on what is written in the prospectus, it is possible that such a variation could be made automatically. Otherwise it would technically require consultation in accordance with Clause 10 and, in some cases, even a ballot, although that would not be arduous if a substantial number of representations had been received.

In other cases, if the levying authority simply abandons the project, the Secretary of State has the power in Clause 21(4) to provide in regulations that when the BRS is to come to an end, ratepayers do not continue paying for a project that is no longer happening. I hope that the noble Lord is reassured that levying authorities can end a BRS early.

Amendment 61B considers the role of the Secretary of State by making it clear that he cannot intervene when a levying authority has departed from a minor or technical aspect of its BRS plans on which businesses considering the original proposals will not have relied. Clause 24 is sensible in that it allows the Secretary of State to intervene and potentially to cancel BRS and order the return to businesses of the sums paid in those circumstances when a levying authority acts inconsistently with information that it has provided to business at key stages of the BRS process. That cuts across the fundamental requirement of the integrity of the scheme and the partnership. The information is included in its final BRS prospectus or in a variation proposal under Clause 10 in the course of a consultation with business, or in connection with the holding of a ballot. So this is very much a nuclear option.

I do not expect levying authorities will be acting inconsistently with the information that they give business. Of course we know that mistakes can happen and that difficulties can arise, but I expect that if that ever happens, the levying authority’s business will spot it; they will be able to anticipate it and be only too ready and able to pull up the levying authority, and so they should. The levying authority should act quickly and decisively to get back on track to deliver the BRS and the project it is promised to.

In very rare cases, a levying authority’s local partners—for example, the ones on the regional improvement and efficiency partnership—might step in to help it get back on track to deliver the project set out in the prospectus; there are good intervention processes available. It is only in the most exceptional cases, therefore, when local engagement with business and other partners has failed to resolve the problems a levying authority might be facing, that the Secretary of State would consider stepping in. Even then, cancellation would be the last resort because the projects we are contemplating are complex, long term, innovative and no doubt expensive. We want BRS to work and to deliver what is promised, and working together to achieve that will always be the first resort, and cancelling of the BRS, with all its implications, will always be the last.

I can offer the noble Baroness further reassurance. The Secretary of State’s power under Clause 24 does not extend to allowing intervention in response to minor technical issues where a levying authority does something slightly different from what is in its prospectus in circumstances where business would simply not be interested. She has already quoted Clause 24(1) and the requirement for there to be a material inconsistency. The Secretary of State’s power applies where there is a material inconsistency between what the levying authority has said it will do and what it is doing. A minor inconsistency will not trigger the power; it is there to be exercised only in extreme circumstances where the BRS and the project being delivered are different from what was clearly set out and promised. I confidently expect the use of the power in other circumstances to be the subject of a challenge through the courts.

I understand the noble Baroness’s concerns and the reasons she has tabled the amendment, but I hope that I have given sufficient reassurance to both her and the noble Lord.

On the second of the two amendments, in regard to cancellation I was concerned not with minor inconsistency but with material inconsistency in a minor matter with minor information, which is different. However, what she had to say before that section of her notes reassured me and I am grateful for that.

It may be because of the stage that we have reached in Committee that I am slow on the uptake, but I posed a specific question and I am not sure that the answer that the levying authority can end a scheme early answered that question. Let me phrase it again. For example, if a retail premises with a rateable value of £1 million—it is a substantial business—is currently paying a major business rate supplement contribution to the order of £20,000 and falls into financial difficulty, with whom does the liability rest? Is it with the levying authority? What would happen with the scheme if that £20,000 was the difference between some of the improvements going ahead and not going ahead? How would that be handled? Could any compensation be forthcoming from the Secretary of State to compensate for that?

My final question is whether in the business plan and prospectus which are put forward for any scheme, it would be advisable to introduce some contingency or reserve so that, in such circumstances, the costings would be there to finish the project, even if one or two of the major contributors were no longer there.

I am sorry. I gave a very abstract answer to that specific set of questions. My understanding is that the prospectus has to cover a number of different contingencies. It has to set out what would happen if things went awry in different ways, and I think that it would have to spell out how a major contributor going bust under those circumstances would be dealt with. Paragraph 23 of Schedule 1 says that there must be a contingency process for dealing with unforeseen circumstances. I think that we discussed refunds at one point, which is part of the notion of contingency. I sense that if things reached a critical stage, the prospectus might have to be revisited and varied in terms of the project. Therefore, those sorts of circumstances would certainly be covered. I hope that that is of more help to the noble Lord.

Amendment 50A withdrawn.

Clause 16 : Interaction with BID levy

I should tell your Lordships that, if Amendment 51 is agreed, I cannot call Amendment 52 for reasons of pre-emption.

Amendment 51

Moved by

51: Clause 16, page 11, line 37, leave out subsection (1) and insert—

“(1) Where a person is, by reference to a hereditament, liable for BID levy in respect of all or part of a financial year in respect of which the person is, in relation to that hereditament, subject to a BRS imposed by the authority, the chargeable amount payable in relation to the BRS shall be offset in accordance with subsection (2).”

Amendment 51 would mean that, where a person was liable for a business improvement district levy and subject to the business rate supplement imposed by that authority, the chargeable amount payable in reference to the business rate supplement would be offset to avoid double-charging.

Amendments 53 and 54 also stand in my name and that of my noble friend Lord Cathcart. Amendment 53 would leave out the words,

“to the extent specified in the rules”,

and Amendment 54 would leave out subsection (4), which states how the rules must be made. As the Bill stands, the levying authority is enabled to make rules regarding what to do when a person is liable for a business improvement district levy and subject to a business rate supplement. Our amendments would remove the levying authority’s right to make rules about that and, instead, specify that liability for the business improvement district levy would be offset against the amount that the person would pay for the business rate supplement.

Amendment 55A, which is consequential, would add the words:

“This section does not apply to the Crossrail project”,

which may come as some relief to the mayor’s office, if to no one else.

The argument for this proposal is obvious in that businesses could well see themselves being charged twice for the schemes. The whole issue of additionality under this heading is also brought into question. We do not want to risk harming the business improvement district schemes. Everyone has said that, where they operate—and of course some, such as the New West End Company, operate here in the capital—they seem to do a very good job of integrating businesses and improving the local area, and we do not want to harm them. At the same time, huge pressures are currently being put on businesses, as I mentioned earlier. Therefore, the fear that levying authorities will raise a business rate supplement but at a sufficiently low threshold so that a ballot is not triggered is real. Because businesses are under so much pressure, they will not be able to vote against the business rate supplement and will then be forced to vote against the business improvement district levy where they do not have a vote on the community improvement levy.

So there are a range of schemes. The amendments aim simply to remove duplication and introduce tax simplification. Taxation under this Government has become a nightmare for anyone involved in business—perhaps not so for the accountants, who I am sure quite welcome the complexity. Simplicity in dealing with these matters will be very important in monitoring progress and engaging local businesses in projects to improve their local communities. With that explanation and those caveats, I beg to move.

I have Amendments 52 and 55 in this group. Amendment 52 would amend Clause 16, which relates to the interaction with the BID levy. Clause 16(1) provides for setting rules for the interaction. My amendment would require consultation with those liable for it and the billing authority—which may be different from the levying authority for BRS—because we do not agree that there should be an automatic offset; there are likely to be entirely different objectives for a BID and BRS in a particular area. Not everybody paying the BID contribution will be liable for BRS, but, before the levying authority comes to a view, it should undertake a consultation.

I have tabled Amendment 55 in the hope that the Minister can explain “consistently” in the context of Clause 16(4). We are told that the rules must,

“apply consistently in relation to BID levies”.

Does that mean all BIDs within the levying authority’s area? I do not know that they can, because subsection (4)(c) requires application uniformly throughout the area. My imagination ran out over “consistently”.

Perhaps I may deal with the offset first and Amendments 51, 53 and 54. Linked to that is Amendment 55A, which relates to Crossrail. Amendment 52 has a different focus. It would leave the decision whether to have an offset to the levying authority, but proposes, as the noble Baroness has just said, that it first be required to consult those liable for the BID levy and the relevant billing authority. Amendment 55 probes the definition of “consistently”, which I hope that I shall have an answer to by the time I come to the end of my speaking note.

I have listened carefully to the arguments. The concerns expressed have been raised not only today but also in the other place. One very clear message that has emerged from these debates, which I hope that the noble Lord, Lord Jenkin, takes as much pleasure from as I do, is that BIDs have been a great success and are a popular initiative. We are determined that they should continue to grow alongside BRS.

I should explain why I, like the noble Baroness, Lady Hamwee, do not think that an automatic offset is the right way forward and why it cuts across the whole thrust of the Bill, which is to devolve the key decisions to local partners and not impose on them. I do not think that I need to rehearse the difference between the BRS and the BID, because I think that noble Lords are very familiar with the scale, the scope and the set of objectives.

As we all now know, the Bill provides an opportunity for local authorities to work together to develop proposals that will enhance economic development. Authorities will have the flexibility to decide how the levy should be set, subject to the overall limit of 2p in the pound of rateable value. They can decide whether to offer more generous safeguards to businesses. They can, for example, set the threshold for liability above the £50,000 threshold. They can decide, as we have just debated, to exclude empty properties.

Against that background, it is therefore absolutely right and consistent that we should leave the decision about a potential offset for those paying BID levies to the local levying authority. Amendment 55A provides that the GLA would not be required to offset BID liabilities against BRS liabilities for its Crossrail BRS partners. The choice will be there for them, to be worked out in negotiation with local partners, bearing in mind the full set of local factors. I recognise and understand that there are strong and persuasive calls for an automatic offset. There are equally strong calls against that, such as that from the noble Baroness, Lady Hamwee.

I give the noble Lord two arguments, not from the Government but from groups that are deeply involved in these situations, such as the South Bank Employers Group. It is an association of major organisations on the South Bank in the Waterloo and Blackfriars areas which helps to deliver a BID-type benefit for their local area through an alternative but voluntary BID levy. It considers that having an automatic offset for BID payers would be unfair. It said:

“The fact that businesses have chosen to contribute to this fund of local additionality … should not in any way relieve them of the obligation to contribute to a major pan-London project like Crossrail”.

It points out that this means that businesses that are not in BIDs, for whatever reason, would not benefit from an offset for BRS because of factors outside their control. The group argues:

“This would be seriously unfair on major businesses which are not in BID areas, whether because they have voted against the BID proposals or because a BID proposal has not come forward, or because the area is not seen as suitable for a BID”.

There speak the employers.

The chief executive of British BIDs, Dr Julie Grail, said that,

“a full offset in London would be a ridiculous and dangerous move and would give an open door to every business community in London to go and get itself a cheaper business rate supplement”.––[Official Report, Commons, Business Rate Supplements Public Bill Committee, 20/1/09; col. 47.]

The Minister makes a good point, but she accepts that we were arguing that London and Crossrail should be exempt. We were not proposing that London should be—

I take that point entirely. However, there are enough reasons not to go down this route of an automatic offset, particularly when the crucial point is that levying authorities can use their discretion on whether to have one or not.

I do not need to rehearse our arguments on Amendment 55A. As the noble Lord said, we have already had that debate.

I am afraid that Amendment 52 is unduly prescriptive, although I understand why the noble Baroness has tabled it. We debated levying authorities setting out their detailed plans in their prospectus last week, including whether they intend to offset BID levies against liabilities for BRS. In the draft guidance that we issued in January for consultation, at paragraph 3.41, we make the point that business will have the scope to challenge prospectus assumptions at the consultation stage. For that reason, we advise that it is in the levying authority’s best interests to ensure the robustness of its business case and to ensure that work on the preparation of the prospectus involves detailed discussions with local business and other interested parties, covering the whole range of matters that should be in the prospectus.

Given that requirement, it would be unnecessary to require them formally to consult about whether there should be an offset for those paying BID levies before they carry out their formal consultation on the prospectus. Again, we should leave it to authorities to determine how best to engage with businesses, and to have that conversation before they finalise their prospectus.

Amendment 55 seeks to clarify whether a levying authority could choose to treat BIDs in its area differently; for example, by offsetting the BID liability of persons in BIDs established before the BRS was imposed but providing no offset for persons in BIDs established after the BRS was imposed. The noble Baroness asked quite rightly about the interpretation of “consistently”.

I hope it is sufficient to tell her that the BID rules must be the same for all BIDs. The same level of offset should apply wherever the BID is and whenever it is established, be it before or after BRS. I hope that that answers the noble Baroness’s question. Clause 11(4)(c) requires the BID rules to,

“apply uniformly throughout the levying authority’s area”.

I think that the explanation that I have given is an extrapolation of that point. The noble Baroness does not look at all convinced.

The noble Baroness is puzzled, because the explanation seemed, as the Minister herself decided, to be of subsection (4)(c)—the uniform application. But consistency is in addition to uniformity, and that is where my puzzlement remains. I am sorry to have bowled the Minister a slightly awkward ball; I had thought that I had warned her, or asked somebody to warn her, about this, but it is obvious that I did not.

I know that the noble Baroness is forensic in her analysis of the language of legislation. I shall have to write to her.

Before my noble friend withdraws his amendment, I acknowledge the kindness of the Minister in saying that I would be as pleased as she is about the success of the BIDs. She obviously knows that I introduced a Bill into the House of Lords to introduce BIDs more than four years before the Government. As the noble Baroness, Lady Hamwee, will remember—because she took a full part in it—my Bill went through all stages in the House of Lords. It had its First Reading on 20 May 1997 and finally had its Third Reading on 6 April 1998. It was debated at some length on the Floor of the House. It then went to another place and, of course, as a Private Member’s Bill that the Government did not want at that stage to support, it fell.

So you may imagine my astonishment when Part 4 of the Local Government Act 2003 came back and, lo and behold, introduced BIDs. Even more astonishing was the fact that it incorporated almost word for word what had been in my Bill in 1997. What really stuck in my throat, and why I mention this, was the total failure of the Minister on that occasion even to acknowledge that there had been an earlier Bill in this House. One of the least attractive characteristics of the present Administration is that they are determined to give no credit to anybody else at all, even when it is as obvious a case as that. That rankled; it really rankled. As the Minister can understand, I am not a person who bears grudges on the whole, but that was something that stuck in my throat.

So, yes, as the Minister has acknowledged, I am delighted that BIDs have been such a success, but the Government need to reflect on whether simply to take over somebody else’s legislation almost word for word and introduce it as their own Bill without any acknowledgment is the best way to legislate.

I almost wanted to delay rising to allow the Minister to respond, but I am happy to give way at any stage if she wishes to do so.

I am happy to put it on the record that I do not think that it is either good politics or good practice not to acknowledge the origins of some legislation. It is all much better government if there is clearly consensus of opinion behind what we do. I am sorry that it happened in that case.

It is nice to see peace breaking out all over the Committee. In this wonderful, fast-moving world in which we work, I am sure that imitation in the policy process is the sincerest form of flattery. I am sure that the Government have spent much of the past three years in Queen’s Speeches, and certainly in their Budgets, flattering Her Majesty’s Loyal Opposition by picking up so many of our ideas.

In seeking leave to withdraw the amendment, I should perhaps do so with some optimism, given the remarks of my noble friend Lord Jenkin of Roding. While we are arguing against double-charging and on the need for burdens on business to be released, and the Minister is making a valiant defence on why that cannot be the case, it may be that in six or 12 months some proposed new legislation called the local levying tax simplification Bill will be introduced which will answer all the points that have not been answered here. I say sincerely, and not in any churlish way, that efficiency of legislating when things can be dealt with in one place at one time aids the process. Speaking from a business perspective, on taxation matters and so on, businesses hate—yes, paying it, but to a greater extent—the uncertainty and complexity of the rules. While we converse fluently in the language of business rate supplements, community improvement levies, business improvement districts and growth initiatives, the average person out there, who is actually paying, has no clue about any of them. It is deeply confusing.

There is no one with more experience and knowledge of local government finance than my noble friend Lord Jenkin, but this was how it went in the 1980s and 1990s and what led the then Conservative Government to introduce the single regeneration budget. The complexity was such that no one quite understood the system so it had to be simplified. That is not flagging up the single regeneration budget rerun for the next Queen’s Speech, if there is one. The Minister has responded, for which I am grateful, and I beg leave to withdraw the amendment.

Amendment 51 withdrawn.

Amendments 52 to 55A not moved.

Amendment 55B

Moved by

55B: Clause 16, page 12, line 9, at end insert—

“( ) Schedule (Amendments to Local Government Act 2003) contains amendments to the Local Government Act 2003 (c. 26) applicable in any business improvement district where a BRS is imposed.”

As Amendment 55B is consequential, I shall focus on Amendment 60A, which is grouped with it, and apologise for its length and complexity.

This amendment provides the ability to broaden the way that business improvement districts are funded by giving BIDs the power to decide whether or not to include property owners as well as occupiers as contributors to their funding. I, too, join the Minister in paying tribute to the noble Lord, Lord Jenkin, for his work on BIDs legislation. At a time in which businesses will be hit by both BRS and BID levies, these measures will go some way to mitigate the impact by spreading the overall burden of both levies from occupiers to both occupiers and owners. As the noble Lord, Lord Bates, and I mentioned at Second Reading, an occupier will potentially be hit by an uplift in rates, an absence of empty property rate relief and the sharp effects of revaluation due to the valuation having been taken in April 2008 at the peak of the market.

BRS is but one more levy, and for occupiers who are already funding a BID it seems a reasonable request of government to reduce the burden by allowing the cost to be spread to owners, a move which most property owners support. After discussion with existing business improvement districts, the amendment allows for flexibility in both the financing of BIDs to include owners and/or occupiers, and for flexibility in the way that the levy is calculated.

I should like to touch on four areas of detail in the amendment. First, proposed new paragraph 3(5) gives two options for the means of calculating a BID levy to be paid by a property owner: the first is the allocated proportion and the second is the allocated multiple. The allocated proportion is where the amount paid is divided up as 30 per cent by owners and 70 per cent by occupiers, or whatever proportion is agreed between the two. The allocated multiple is where the calculation is based on a multiple of rateable value. These are complicated proposals and I shall speak later to a local authority veto as a last resort to ensure fair and equitable use of the funding mechanism.

The second area of detail relates to proposed new paragraph 6, which seeks to retain the principle of 50 per cent by value and 50 per cent by number that is applied to occupiers at the moment. By aggregating and ensuring that the two together, 50 per cent by value and 50 per cent by number, vote in favour, the BID takes place.

The third point of detail relates to the local authority veto in proposed new paragraph 7. As a last resort, the local authority can verify that the arrangements to deal with the allocation are fair and equitable, particularly in relation to the allocation by multiple under proposed new paragraph 3, which is fairly complex.

Proposed new paragraph 10 deals with where a leasehold interest may or may not be counted as ownership. It suggests that if a lease is longer than seven years, a person should be treated as being a property owner.

Those are the points of detail that I wished to raise in relation to the amendments. I now wish to make two specific comments on issues that the amendments do not capture. First, the amendment deals only with BIDs where there is a BRS; it does not deal with BIDs outside BRS areas. This clearly creates a two-tier arrangement for business improvement districts. I believe there is a legal problem with sweeping up BIDs outside the BRS areas in the Bill and I am in discussion with the Bill Office about that.

The other issue relates to the passing on of costs to tenants. It has been a worry that owners, if billed, will pass on the costs to tenants. In my view, this is not a significant risk. Indeed, where property owners are voluntary contributors to BIDs already operating, that has not been the experience. I do not believe this issue needs to be dealt with in the Bill.

Finally, I appreciate that my amendment is complex but, as I understand it, the principle has cross-party support. Given the pressures on business at the moment, I urge the Government to support these proposals and to accommodate the most unusual desire from the property community to be taxed. I beg to move.

I support the amendment and congratulate the noble Baroness, Lady Valentine, on having dealt with such a complex subject—the schedule is indeed a complicated document—so briefly and clearly. I want to add just one or two points.

The first is that the pressure for owners to be included within the BID system has existed from the beginning. When my Bill, to which I referred in rather intemperate terms on the previous amendment, was introduced, we had amendments to do that. The Government made it clear then that they did not really approve of that but, as they knew that the Bill would not make any progress in the other place, we got owners included in the final version. When what became the Local Government Act 2003 was introduced, it very wisely went through a pre-legislative committee—the Transport, Local Government and the Regions Committee—which reported on this issue. The research paper published by the House of Commons Library stated:

“During the consultation process it was also suggested that property owners, as well as rate payers, should be liable for the levy, and the Select Committee report on the Draft Bill recommend that property owners should be included”.

That was in 2002, so we are going back a long way. The Select Committee in another place said:

“We recommend that the Government works with the British Property Federation and other business organisations to find the best way of involving property owners as contributors to Business Improvement Districts, if necessary amending primary legislation and certainly covering this point in regulations and guidance”.

However, that recommendation did not commend itself to the Government. When amendments were moved in the other place proposing that owners should be included, the then Minister, Nick Raynsford, for whom I have considerable respect, led the charge against including owners.

However—surprise, surprise—on this occasion, the honourable gentleman who moved the amendment in the other place proposing that owners should be included in BIDs was the right honourable Nick Raynsford MP. There is more joy in heaven over a sinner that repenteth and so on, and it is very good that we now have his support on this matter. I hope that that augurs well for support from the Government.

The noble Baroness’s amendment may well not be in the form in which it should finally appear in legislation but that is frequently the fate of those who move amendments. They then wait for government amendments that have the benefit of being drafted by parliamentary counsel. However, the noble Baroness’s final point is very important. Because the Bill is concerned with the business rate supplement, the amendment has had to be drafted, on advice from the Public Bill Office, so that it applies only to BIDs where there is a BRS levy. That gives rise to the astonishing anomaly that, if we do indeed agree that owners as well as occupiers should pay a contribution to a BID levy, it can apply only in areas where a local authority has decided to put forward a proposal for a business rate supplement. BIDs in other areas would affect only occupiers and not owners, but that would be wholly illogical.

I, too, have had discussions with a helpful gentleman in the Public Bill Office. The reason is not so much the Long Title of the Bill, but simply the Bill’s general intention as evidenced by its provisions. It would be inappropriate, and therefore impossible, to have an amendment that would cover BIDs that are not in a district which was going to have a BRS. When I asked what would be necessary to achieve that, the answer was that it would probably require an amendment to the Long Title of the Bill. I said, “What do we have to do to do that?”, and was told, “We can’t do that in this House. It will have to be done in the other place”. This means that there must be a peg in the Bill as it leaves this House and goes back to the other place which would enable those who wish to support owners being included in BIDs in every area to have an amendment to the Long Title.

I hope that I have made myself clear. This is the sort of procedural difficulty that one finds oneself in, with rules that have grown up over a long period and for which I have always felt a great respect. It is therefore for the Government to ensure, when we come to Report or Third Reading, that there is a provision in the Bill that would allow the other place to make the change in the Long Title, as I have suggested. We could then have the logical position that, if owners can be included—it is only a power—in a BID, then it could apply to all BIDs and not just those which happen to have a business rates supplement applied. I very much hope that the amendment, or the spirit and purpose of the amendment, moved by the noble Baroness, Lady Valentine, commends itself to the Minister.

I feel as though I have sat through a master class in parliamentary draftsmanship, consequential detail and research of the history of the Bill. I am immensely grateful for the way in which the noble Baroness, Lady Valentine, moved this hideously complicated amendment. What is trying to be achieved now makes perfect sense.

I cannot ask anything. Perhaps my only function in this debate is to give the Minister’s team time to concoct great answers to the challenges that have been presented. This is simply a case of perfect logic and sense. Why should any business engage any tenant of a retail premises in improving its local area? The answer is that it would increase the footfall into that area and potentially enable it to sell more produce and therefore make greater profits. That is the logic. Hitherto, however, an important group of people was exempted from that: the property owners themselves. If you are renting out a property at £15 per square foot, and if it is valued at £10 million, to use an illustrative sum, then when the business improvement district is established and improvements in the local area take place, you clearly have a more secure tenant. You may find that when you come to re-let or renegotiate, you can increase your rent per square foot. In addition, you have a capital value increase because, as the rental values increase, so the asset’s capital value increases.

So it is obvious that, whereas the tenant may only benefit in one way—the bottom line in terms of sales—and potentially then fall foul of their rent being increased by the landlord in subsequent years, it follows that the property owner is benefiting most from this on two counts. Therefore, the fact that they should contribute seems to be an omission from earlier drafts of the Bill and should certainly be corrected now, even if it needs to be done in such a complicated way.

When the amendment was debated in Committee in the other place on 27 January, at cols. 184-186 of the Official Report, and on Report on 11 March, at cols. 337-338, concern was expressed that there should be no perverse consequences. I took that to mean that the purpose of the amendment ought to be to ameliorate the cost of the project; it should be a mechanism not for increasing the overall take from the business community but for spreading the burden more widely so that some of our concerns about the impact on business, which we have mentioned on a number of occasions, may be softened by including property owners in the measure. It would be helpful if we could hear assurance from Ministers that, should the amendment be acceptable, those guarantees in terms of the overall take and spreading the impact on businesses would be upheld. Perhaps that should be mentioned in the Bill if it is not directly referred to in the amendment which has been so ably moved. I am pleased to add my support to the amendment, which stands also in my name.

We, too, support the amendment. Given the time, and knowing that we are aiming to finish Committee stage this evening, which imposes a perhaps unnatural constraint—I shall not say why—I have three questions. First, as I recall it, the problem with owners coming into the BIDs arrangements was identifying them and arranging to collect money from them. I am sure that the noble Lord, Lord Jenkin, who carries a lot of credit for all this, will remember in more detail than me, but if those problems were identified at the time of the original proposal, I would be interested to know, whether it is from the noble Baroness, Lady Valentine, or from the Minister, whether the problems have been solved.

My second question is just for the noble Baroness, who referred to the double lock. Reading the amendment, I wonder whether there should be extra locks so that the owners and occupiers as one body are satisfied before they get to the double-lock stage. Perhaps the idea was considered and discarded. There are two constituents; rather than aggregating them, should there not be separate processes first?

My third question follows the comments of the noble Lord, Lord Jenkin. I had written down “Long Title and scope of Bill”. At the beginning of a Committee stage, we postpone the Long Title. I do not understand the procedures as well as I should but postponing it suggests to me that we shall come back to it right at the end of the Committee stage. Does that give us some help and—no pun intended—some scope?

I will try to pick up some of those points. On the information to collect the money from owners, I believe that Julie Grail of the business improvement districts organisation—I cannot remember the name—said that it is possible to get the information to collect using local estate agents. There is some evidence, to which the Minister might refer.

Aggregate versus separate is a valid question that can be argued either way. I would probably have a strong view if I were to think longer about it; it deserves further reflection. I will not enter into the issue of postponing the Long Title.

I am grateful to everyone who has spoken in the debate, particularly to the noble Baroness for moving the amendment. As the noble Lord, Lord Jenkin, made clear, it raises complex issues. He took us through some of the most recent and longer-term history and put forward some challenges, which he will understand I cannot respond—

I may have more than enough time but in terms of the Long Title, it is not so much for the Government but for the House itself. If the noble Lord will leave that challenge with me, I will certainly think about the scope and the issues that it would raise.

The noble Lord has taken us through the attempts made by Nick Raynsford in the other place to amend the Bill. He proposed that there should be scope to ballot property owners in BIDs in areas where a BRS is in place. Creating an additional income stream for the BID from the property owners would provide an offset for occupiers against their liability and it would also overcome the concern of property owners who make voluntary contributions that others “free ride” on the benefits that their contributions bring.

We all agree that BIDs are an important complementary policy to give local authorities a range of choice to support economic development. It will come as no surprise to the Committee that we have been working on proposals to address the issue that has been raised by the noble Baroness, Lady Valentine, this afternoon, so I am happy to put on the record that we will be tabling amendments on Report. We will certainly be discussing the nature of the amendments with her.

The noble Lord, Lord Bates, asked whether it meant that everyone will get to pay less. If owners are to be signed up, they must have an interest in the project, so increasing income to fund more owners and focusing on better projects has some merit. I will have to write to noble Lords to follow through on some of the issues that I am addressing, as there is no time to go into sufficient detail. If the noble Lord will leave it with me, I shall write to him on that as well.

Our amendments will propose that when a BID is in place, those proposing a new BID or the body running an existing BID, can choose whether they want to involve property owners. If the BID, body or proposer choose to involve property owners, they can ballot them. We intend that there should be flexibility so that the BID, body or proposer should be able to decide whether property owners should be balloted at the same time as, and as part of the ballot of, other ratepayers, or to hold two separate ballots. Clearly, those are issues that we need to discuss and get right.

The level of the property owner BID levy will be set out in the BID proposal. Where the purpose of the property owner BID is to offset the BRS liability of those also liable for a ratepayer BID, the extent of the offset will be as specified in the BID proposal. We will, wherever possible, replicate for property owners the arrangements that currently exist for ratepayer BIDs. However, when certain details are specific to property owner BIDs, we propose to deal with these in regulations.

I shall write to noble Lords following up this debate, as I am leaving out quite a lot of detail due to our having three more groups with which to deal. When I write, I shall certainly address some of those issues and I shall also give the Government’s view on the matters raised by the noble Baroness, Lady Hamwee, which she addressed to the noble Baroness, Lady Valentine. I hope that with that rather brief summary, noble Lords will be content.

Perhaps I did not catch it but is the noble Baroness saying that the Government’s amendment will extend to all BIDs or only to BIDs in BRS areas?

This is a matter not for the Government but for the House authorities and so on, to which the noble Lord himself alluded. However, I will read the debate properly, and I certainly know what has inspired it. Will the noble Lord allow me to think about the matter before we continue our discussions?

I thank noble Lords for their constructive contributions and look forward to discussing the amendment further. I beg leave to withdraw the amendment.

Amendment 55B withdrawn.

Amendment 56 had been withdrawn from the Marshalled List.

Clause 16 agreed.

Clause 17 agreed.

Clause 18 : Notice to billing authorities before start of financial year

Amendment 57 not moved.

Clause 18 agreed.

Clause 19 : Notice to billing authorities during financial year

Amendment 57A not moved.

Clause 19 agreed.

Clause 20 agreed.

Clause 21 : Collection and enforcement

Amendment 58

Moved by

58: Clause 21, page 14, line 19, leave out “prescribed” and insert “reasonably determined by the levying authority”

I shall speak also to Amendments 61A and 61C. Amendment 58 relates to the abandonment of a project and to collection and enforcement in that situation. I seek to take out the provision that the Secretary of State may prescribe the date when the BRS is treated as having come to an end. I believe that that should be a matter for local authority discretion, and my amendment simply asks the Minister to justify the Secretary of State’s role.

Amendment 61A is an amendment to Schedule 2 and was prompted by the Minister’s letter following the first day of Committee. The letter, for which I thank her very much, dealt with BRS refunds. At 4.56 pm on Thursday, having just received the letter, I dictated this little amendment. I am sure that it is not very good but it gives me the scope to ask whether there can be, as she seemed to imply, no circumstances where a refund is desirable or proper before the end of a project.

When we debated refunds on the previous Committee day, I was aware that there are provisions for refunds at the end of a project. However, it has occurred to me that there might be circumstances where a refund is appropriate part-way through a project—for example, if there is a bit of stop-go. I may be told that the right thing there will be to vary the amount of the BRS in a subsequent year.

I do not know whether paragraph 3(1)(a) of Schedule 2 relates to the BRS for a particular year or to the BRS coming to an end. I am not clear what that means. It does not seem a natural reading to relate it to a particular year within a number of years.

Finally, as regards Amendment 61C, if I have read Clause 24(7) correctly, the cancellation does not apply where a BRS has come to an end. Does that mean that if the Secretary of State cancels the BRS at a particular date, a rate payer who has failed to pay the BRS due before that date is able to avoid paying? I hope that is a clear question even if my introduction to the amendment was a little garbled. Clause 24(7) reads to me as though it might be possible to avoid enforcement simply because the BRS has ended. I beg to move.

We do not have a particularly strong view on Amendments 58 and 61C. I am sure they are worthy, but we do not have a firm view on them. Amendment 61A seeks to ensure that the Secretary of State might give refunds or credits. Clearly, we wholly support that as it is consistent with our approach to the Bill. In many projects which have begun recently, the costs of raw materials such as steel fabrication and so on have declined dramatically, as have the costs of labour in certain parts of the country as people are eager to find work. It is important that, where a project comes in under budget thanks to good management, there is the flexibility to refund the money whence it came. We are very supportive of Amendment 61A.

Amendment 58 would potentially allow the levying authority to determine when to stop collecting and enforcing a BRS for a project it had abandoned. The reason we do not think the amendment is appropriate is not because we do not think levying authorities would behave honourably but because it assumes circumstances where relationships and projects have collapsed and a fair degree of chaos obtains because things have not worked out as they were supposed to. Under those circumstances, it is important to avoid the potential for people to claim that the levying authority is acting in a prejudicial or unfair way. If things have gone that sour, those who are paying the supplement have to have confidence that the BRS will cease as soon as possible.

Perfectly pragmatically, we think that only a party outside the levying authority would have that degree of impartiality and would be seen to be acting impartially. If we left the decision with the levying authority, it would put it in a vulnerable position because, unless it decided to stop collecting the BRS the day the project was abandoned—and I cannot see that that would happen—it could be open to claims that it was acting dishonourably. That is why we have made provisions for a BRS to be collected and enforced beyond the abandonment of a project. It allows for the decision to be made in a way that would not leave the levying authority open to allegations of unfair play. That is why the Bill gives the Secretary of State the power to specify this in regulations.

Amendment 61A, on refunds, broadens the provisions in paragraph 3(1) of Schedule 2 to the Bill, which deals with refunds where a BRS has ended and the BRS revenue account is in credit. The amendment would allow the Secretary of State to make regulations governing refunds in general, including in cases where a BRS has not come to an end.

I absolutely understand that there needs to be clarity in terms of how refunds should be handled, including in cases of overpayment. The amendment is, however, covered by Clause 21, which already makes provision for the Secretary of State to make regulations governing refunds of BRS. Clause 21(2)(a) makes provision for the Secretary of State to make regulations in respect of refunds in those cases where a ratepayer has overpaid during the course of the BRS. That is achieved by reference to the Local Government Act 1988. The noble Baroness’s precise question was whether this covers arrangements during the course of the BRS. I understand that it does. I hope that that will help.

Amendment 61C would allow a levying authority to continue collecting or recovering the BRS even if it had been cancelled by the Secretary of State. The Bill provides that the collection and recovery should cease if a BRS is cancelled by the Secretary of State. As we have just debated, the Secretary of State will intervene only as a last resort—for example, when the levying authority has used the supplement for a different purpose than was set out in the prospectus and has not met the requirements set out for variations in Clause 10.

I absolutely agree that it would not be right to ask local businesses to continue paying the BRS for a project that has gone so wrong. It is right that all attempts to collect the BRS in such circumstances should cease. As I remember it, that is the answer to the noble Baroness’s question; in other words, yes. I hope that I have remembered the question correctly and that the answer is, indeed, “yes”. With that, I hope that the noble Baroness will withdraw her amendment.

I cannot quite remember how I framed the question. I am not sure whether I was expecting the answer “yes” or the answer “no”, for the classicists among us. I will have to go back and read that. My concern was essentially about evasion, so if the answer is “yes” it might be a bad one.

I note what the Minister says about Amendment 58. I am still not sure that Amendment 61A, on the refunds, has got to the point that the noble Lord, Lord Bates, and I seek. The answer was framed in terms of overpayment. It is a pretty technical point, even though it might seem to be an entirely common-sense one to the ratepayers. In my mind, the BRS is not the same sort of animal as national non-domestic rates for this purpose. It deals with a particular project, which may speed up, slow down, or change a bit and so on. I can therefore see that there could be circumstances where a refund would be appropriate for BRS, but which would be completely inappropriate—simply nowhere near to applying—for the NNDR. Again, it might be useful to discuss this after this stage. I beg leave to withdraw the amendment.

Amendment 58 withdrawn.

Clause 21 agreed.

Clause 22 : Administrative expenses

Amendment 59

Moved by

59: Clause 22, page 14, line 26, after “incurs” insert (“including expenses incurred in preparation for collection or recovery)”

We are speeding up to finish this before the witching hour of 7.45 pm. Amendment 59 would provide for expenses incurred in preparation for collection or recovery of the BRS to be recovered under Clause 22. Amendment 60 would take out the subsection about the administrative expenses to be paid by the levying authority not exceeding the amount prescribed in regulations. On that second point, I would have thought it should be the actual amount that is borne by the levying authority.

Generally, I do not believe that the billing authorities should be out of pocket. That point has been made in particular by London Councils, and it applies more broadly. In London, there is a particular point, in that it will be the first area to have a BRS and it will play a pathfinder role. It will have set-up costs, software upgrades and so on, which will benefit those who follow after. Those additional costs incurred by the boroughs should be recognised and the costs repaid. London Councils made the quite proper points that these matters should be in the Bill and not in regulations, which are relatively easily changed, and that the recovery of costs is a point of principle. I beg to move.

I hope that I can satisfy the noble Baroness on this point. Amendment 59 would enable billing authorities to be able to recover the costs that they incur in preparing for the collection and recovery of BRS. Amendment 60 would remove the power for the Secretary of State to set a cap on the amount to be paid by levying authorities.

We have issued the consultation paper with our proposals for secondary legislation that will be needed to enable BRS to be levied. The consultation paper covers the arrangements for the collection and enforcement of BRS, including the costs of collection. It also floats different options for calculating the costs of collection.

It is right that billing authorities should be able to cover the legitimate costs that they incur in collecting and enforcing payment of BRS; we are agreed on that. But it is equally important that such costs should be proportionate to the amount of BRS collected. Those businesses that will be paying the supplement will accept that there are administrative overheads associated with any project; but those costs must be reasonable. Sums must not be diverted away from the project into collection costs. That is why we have framed the powers in Clause 22 in the way we have. It means that there is provision for reimbursing billing authorities their legitimate costs, which should reassure business.

The consultation document invites views on whether these costs should be a fixed percentage of the annual total amount of BRS to be collected, or whether this should be a fixed amount. A third option is whether this is something that should be agreed locally between the levying authority and the billing authority, subject to an upper limit to provide reassurance for business.

The three-month consultation period will give stakeholders the opportunity to express their views on these options or to come forward with alternative ways of addressing this issue or, indeed, any of the proposed arrangements for administering BRS. I reassure the noble Baroness that our intention, subject to the outcome of the consultation, is that a billing authority should be able to recover the reasonable costs incurred in preparing for, collecting and enforcing BRS. I hope, with that on the record and with the consultation period about to begin, that the noble Baroness can rest assured that a good solution will be found.

Of course, I tabled these amendments before the consultation document was published. This may not be a good, liberal attitude but, on an issue that would not be subject to consultation, the billing authority should not be stuck with costs that are essentially imposed upon it by the decisions of the levying authority. However, I will think about what the noble Baroness has said, and I beg leave to withdraw the amendment.

Amendment 59 withdrawn.

Amendment 60 not moved.

Clause 22 agreed.

Clause 23 agreed.

Amendment 60A not moved.

Schedule 2 : Accounting

Amendments 61 and 61A not moved.

Schedule 2 agreed.

Clause 24 : Power to cancel a BRS

Amendments 61B and 61C not moved.

Clause 24 agreed.

Clauses 25 and 26 agreed.

Clause 27 : Special introductory provision

Amendment 62

Moved by

62: Clause 27, page 17, line 4, at end insert—

“(1A) The requirements under section 7(1) or 10(7) to hold a ballot do not apply in relation to a BRS imposed by the Greater London Authority for the purpose of raising money for expenditure on a project where—

(a) the project begins before the commencement of section 1; and(b) the chargeable period of the BRS begins on or before 1st April 2011.(1B) Where a BRS is, or is proposed to be, varied, the reference in subsection (1A) to the BRS includes a reference to the BRS as varied or proposed to be varied.”

Amendment 62 agreed.

Clause 27, as amended, agreed.

Clause 28 agreed.

Clause 29 : Regulations etc

Amendments 63 to 66A not moved.

Amendment 67

Moved by

67: Clause 29, page 19, line 2, at end insert—

“( ) For the avoidance of doubt it is hereby declared that Regulation 14(6) of the Non-Domestic Rating (Alteration of Lists and Appeals) (England) Regulations 2005 (which provides that the alterations made to correct inaccuracies in local rating lists shall have effect from the day on which alteration is made) shall apply to any lists affecting the liability to pay BRS; and where such an alteration affecting liability to pay BRS is made, it shall in no case have retrospective effect without error or default on the part of a ratepayer.”

I am conscious of the time and the sheer joy that overcame the Committee as we heard the government Front Bench concede an amendment. That has been a rare treat and worth sitting through four hours for. We appreciate it.

I say at the start, in case people are getting a little agitated, that I do not intend to speak to the amendment for more than a couple of minutes or delay the Committee further. However, I want to raise an important point. The two amendments in this group would alter the legislation to say that, where an alteration is made due to an error which is not the fault of the ratepayer, there shall be no retrospective effect.

As the amendment is phrased, I can almost hear a collective sigh of, “Well, of course there could be no instance where there was no fault; there would be no retrospective element to a business rates supplement”. However, I am afraid that we have precedent in the taxes on ports which were levied retrospectively. In May 2006, the Valuation Office Agency undertook a revaluation of 55 statutory ports in England and Wales. It concluded in 2008 that there was a case for revaluation of those single businesses and then decided to backdate it to 2005. The effect was to fling many viable businesses into severe difficulty at this critical time. In fact, a number of them have been forced into insolvency. Technically, although they have longer to pay off the arrears—they can do so over eight years—this has meant that the effect of those arrears must be held on their balance sheets.

The Treasury Select Committee has looked into this and has argued that there should be no retrospection on this particular tax. It was debated, as I am sure the Minister recalls, on the Floor of the House on 18 March. There, the Government were defeated by 77 votes to 69, if my memory serves me correctly. Therefore, there was a moral case for tackling this iniquitous tax, which is placing so many businesses in difficulty at present. The point of tabling the amendment at this stage is simply to say that it is unthinkable that there would be circumstances where the events suggested in the amendment would give rise to a charge on the taxpayer. Therefore, in the interests of consistency, the Government should extend the spirit of joy and generosity which has broken out here in the Moses Room to these needy businesses which have not been at fault but have been clobbered with this retrospective tax of £124 million. I beg to move.

The noble Lord and the Minister will not be surprised to hear that we support the amendment. It has just occurred to me that it is not logical that this amendment is allowed to be tabled when a more extensive amendment about BIDs outside BRS areas is not. I do not see the distinction, although I do not expect the Minister to respond to that.

I am afraid that the joy will now be confined because, much as I would like to cave in completely and agree to the noble Lord’s amendment, I am afraid that I cannot do so. However, I know why he has raised the question of the ports. We had a long and, I believe, thorough and honourable debate on what had happened regarding ports, and I shall not reiterate any of that here. The noble Lord has put his views on the record and I completely respect that. We did what we could within the law, although I do not think that “generously” is a word that he would accept.

With this group of amendments we come up against the fact that BRS, as we have said throughout this debate, builds on the non-domestic rating system. In particular, liability to BRS, and the level of liability, will be based on the rating list entry for any given property. Rating lists can be changed by valuation officers to ensure accuracy and therefore the accuracy of rates liability. Sometimes this can lead to backdated increases in rates liability and sometimes also to reduced liability.

However, the point is that, in the context of the practicalities involved in ascertaining the need for changes to a rating list and then establishing what change is required, backdating has been an essential and, frankly, a fair part of the normal functioning of the rating system. It ensures consistency and fairness between ratepayers, and it should carry through into the BRS system. I believe it is only right that we maintain this consistency; otherwise, businesses occupying properties of the same rateable values will be liable for different BRS bills. It would be unfair to businesses that had been paying the correct supplement if others had been paying smaller BRS bills.

Therefore, much as I would like to continue the spirit of co-operation, I am afraid that I cannot do so, but I appreciate that it is not inappropriate to end this Committee stage on an issue of substantial interest.

I cannot say that I am grateful for that response, as obviously I am not. Perhaps I am more grateful that I was allowed to table the amendment, given the comment of the noble Baroness, Lady Hamwee, who is expert in these matters. I can say only that the points have been made and the comments are on the record, and we will hope that the authorities which were gracious and charitable enough to allow this amendment to be tabled in Committee might be so inclined when it comes back on Report. I beg leave to withdraw the amendment.

Amendment 67 withdrawn.

Amendment 68 not moved.

Clause 29 agreed.

Clauses 30 to 32 agreed.

Bill reported with amendments.

Committee adjourned at 7.50 pm.