Clause 1 : Power to impose a BRS
1: Clause 1, page 1, line 3, at beginning insert “Subject to the provision of section 4,”
My Lords, I welcome the noble Lord, Lord Davies of Oldham, who is a veritable and valiant Pooh-Bah, taking up this Bill at what I assume was very short notice. I should say almost in the same breath that I am very sorry that the noble Baroness, Lady Andrews, is not here to see it through this stage. She described the Bill as “pristine” when she first introduced it. We are hoping that it will become a little grubbier as we go through today.
I should declare an interest as one of three joint presidents of London Councils. I was also a member of the London Assembly, part of the Greater London Authority, and the London Borough of Richmond upon Thames.
As well as moving Amendment 1, I shall speak also to Amendments 6 to 9, 20, 21 and 25 to 28. Amendment 1 is a paving amendment and, I accept, not a very subtle one at that. This is the way we do things here. The noble Lord, Lord Bates, on behalf of the Conservative Benches, has put his name to all the amendments in this tranche. I am grateful for that. The Bill provides for a ballot if more than one-third of the total cost of the project is to be raised from the business rate supplement or if the levying authority decides to hold a ballot. For us on these Benches—and, I believe, for all the Opposition—it is a point of principle that all those who are being asked to contribute should have their say, whatever the proportion of the BRS to the total cost of the project. Their view may, of course, not prevail—that is in the nature of voting—but they should be given the opportunity to exercise a vote. We are well aware that the Local Government Association is not enthusiastic about having a ballot in all cases. I suspect that this has something to do with a mixture of amour-propre and pride, confidence in how local authorities operate, and, no doubt, the cost of holding ballots. I explained in Committee that, although I would normally be heard to be supporting local authorities, that support is not without a critical approach. I believe in this case that the claim of the business organisations for a ballot and, more importantly, our own values and the strength of our own feeling about the necessity of allowing for a ballot should prevail.
At the previous stage the Minister quoted the LGA’s claim that no authority will make a decision that has a detrimental effect on its local business community. Of course not, but that is not quite an accurate description. No authority will make a decision which it thinks will have a detrimental effect on its local business community. But that is not the point. What is proper is that business should be able to express its view via a ballot and affect the outcome. Views will have been expressed before a ballot through consultation. The two stages of consultation and ballot are complementary, not alternative. The Minister defended the provision that there should be a compulsory ballot if one third of the costs are to be met by the BRS and said:
“I would ask noble Lords to think about whether it would be right, democratic or fair that an entire project of some significance that was being marshalled by a balance of partners should be put in jeopardy due to uncertainty over a relatively small but critical element of a funding package. I would argue that it unbalances the partnership and introduces an avoidable degree of uncertainty. It is not worth taking that risk if the BRS is contributing only to a relatively small proportion of the overall funding package, which is one that would genuinely help business because it will be the test to be applied”.
A relatively small proportion which would genuinely help business? This is a top-down approach. I am sure that the noble Baroness, Lady Andrews, did not mean this. It quite honestly just dismisses businesses as not knowing what is good for them. It fails the test of what is right. She said that one-third was “a fair point” because the business rates supplement is,
“a smaller player in terms of the overall funding of a project”.—[Official Report, 11/5/09; col. GC 329.]
Whatever the proportion of the total cost, the effect on the individual ratepayer of that BRS will not vary.
In the case of the other contributors to a project when there are a number of funders of a package, each contributor or investor will take a decision as to its own contribution—its loan or whatever it might be. In the case of BRS, it will be the local authority, not the ratepayers, which will take the decision about the “smaller contributions”. The CBI and others have put forward arguments in support of a mandatory ballot on the basis of its practical benefits because business has better experience and understanding of investment than local authorities. They may have a point, but for us this is a matter of principle. Describing a mandatory ballot, as the Minister did in the Commons, as giving business a veto, is, as I have said before, offensive.
I should make clear that the amendments would not bring Crossrail within the ballot provisions because of the amendment to Clause 27 agreed in Grand Committee. Crossrail is very different. It has been the subject of discussion, publicly available information and legislation over a long period, as has the contribution of businesses with a high rateable value.
My amendments are not an attack on local government. If a local authority has the confidence to propose a project and put together a funding package, it should have the confidence that local business will support it. It will have to put it to local business if business is to contribute more than a third. After all, what is appropriate for BIDs is appropriate for the bigger schemes which are likely to be the subject of the business rate supplement. I beg to move.
My Lords, I support this amendment and endorse the remarks so ably made by the noble Baroness, Lady Hamwee. I want to put on record our thanks to the noble Baroness, Lady Andrews, for the way in which she has conducted the negotiations and discussion, trying to keep us informed throughout this process. We have appreciated it and it has helped enormously, even if we have not always been able to agree. In that respect, I welcome the noble Lord, Lord Davies, to this part of the debate.
We start with an issue which has been rightly identified as one of principle. The objective of the Business Rate Supplements Bill, we are led to believe, is to encourage a genuine partnership between business and local authorities. How can there be a genuine partnership if one argument is that business has a veto and the other is that local authorities have a veto about consulting with local businesses? The noble Baroness, Lady Hamwee, has already referred to a particularly interesting exchange in Committee when the noble Baroness, Lady Andrews, asked noble Lords to think about whether it would be right, democratic or fair to consult with businesses. That seems in many ways to give away the myth of what is going on here. What has been proposed is not really a partnership but a tax. Therefore, there is no desire to involve businesses in the decision.
There is a problem with the notion of the threshold: where the proposal for a business rates supplement exceeds one-third of the total cost being put forward, that gives rise to a ballot. That leaves it open, given that there is such an arbitrary strike of where that boundary should fall, for local authorities to so manage their affairs in putting forward these proposals that a ballot does not actually take place. The simple way of starting off on the right footing towards making this a genuine partnership is to say that business involvement is essential from the outset. After all, if the objective of the business rate supplement is to promote economic regeneration, surely businesses will have nothing to fear from a referendum. All businesses will benefit from it. That is why business improvement districts work: because the people with a clear vested interest in an improvement in their area attracting more customers, more trade, must be totally signed up and committed. If the business rate supplement is genuinely additional, for economic regeneration in an area, and is crafted in a way focused on the needs of business, when business is invited to contribute to it, most businesses will want to support it. Therefore, why not test that opinion from the outset?
The other benefit has been identified by the CBI in its helpful briefing on the clause. It states that it would deliver an improved relationship between local government and business from the outset—a point already made—and that it would mean better investment decisions, because businesses’ experience would mean that only projects with demonstrable benefits to local economies would proceed. Again, that is a very important and valuable point. It would also enable levying authorities to have greater flexibility, because business communities are likely to accept greater flexibility in the knowledge that they will really be able to influence the final outcome. That is only fair when it will lead to firms paying higher taxes for projects—above and beyond what they already pay. The CBI states that that is not a business veto but a judgment about whether businesses actually expect to see value for money when they pay more tax in order to support a project. We very much support those sentiments on behalf of business. If the Government were to accept a compulsory ballot, that would be a clear way to settle down some of the sceptics about the Bill, because it would clearly state that it is a genuine partnership between business and the local community for the benefit of all concerned.
My final point relates to the size of business involved. We are not talking about a ballot that involves hundreds of thousands of businesses in a local area. The threshold proposed is of a rateable value of £50,000. I am sure that the figures for central London will be higher, but outside London, that points to an office or retail space of between 3,500 and 4,000 square feet. There could be 35 to 40 people in there. In a given area, there will be relatively few of those businesses, but they will be a significant part of that local community and the local economy. The notion that they may somehow be excluded from decision-making and discussion—having a voice—on something to which they may be asked to contribute and which is notionally presented as for their benefit is unacceptable. I am therefore very happy to support the amendment and hope that it is secured.
My Lords, I did not take part in the debate in Grand Committee. I have of course received the briefing from the Local Government Association suggesting that there should not be ballots in all cases. When I told someone who was arguing that there should be ballots in all cases that the Local Government Association does not want that, they gave the Mandy Rice-Davies answer: “Well, they would say that, wouldn’t they?”. That is the position I have come to. The argument advanced by the noble Baroness, Lady Hamwee, and my noble friend on the Front Bench is right as a matter of principle. There should be ballots in those circumstances.
It is not enough for the local authority to say, “We believe that it is in the interest of the business community that we introduce these improvements and charge property holders and occupiers with more than £50,000 rateable value the business rate supplement to pay for it”. They should go to those people to ask them, not just as a consultation but to say, “If you support this, do so in a ballot”. If the majority both by value and by number of occupiers votes yes—as it is put in the clause, if A is greater than B—it would go ahead. If more than a third is involved, there will have to be a ballot anyway, but where less than a third is involved, I think the authority should ask the occupiers in a ballot whether they approve of and will vote for it.
That is the same principle—no doubt we will come to this later—as we had for business improvement districts. In the BIDs, there was always going to be a ballot of the occupiers. We now know that that can be extended in certain circumstances to the owners as well. The ballot was an essential part of that mechanism. So should it be in the business rate supplement.
I support the amendments and I hope that, on reflection, the Government may feel able to accept them.
My Lords, I declare an interest as a chartered accountant and as a director of companies that pay business rates, and I have been a councillor for more than 10 years, so on this amendment, I probably have a foot in each camp. I cannot see the logic of the Government's position in not giving businesses a vote in all instances. That seems to defy all logic.
Last night, while listening to the European election results, I heard Harriet Harman saying time and again that the Government must listen to what the people are saying, that the Government must address their concerns. Here is the ideal opportunity for the Government to do just that. All business organisations are saying that there should be a vote in all instances where a business rate supplement is charged. In fact, most, if not all, submissions from lobby groups that I have received argue that there should be a vote in all instances. That is, except for the Local Government Association. As my noble friend Lord Jenkin has just said, “They would say that, wouldn’t they?”. If, as Harriet Harman says, the Government are going to listen to and address the concerns of business, this would be a good place to start. After all, the Government and the Prime Minister keep telling us that they want to support business. Here is their opportunity.
The second piece of logic in the Government's position that I do not follow is that of consistency. The Government are prepared to give business a vote if its total contribution is greater than a third of the total cost of the project. I cannot follow the logic of not giving the vote below one-third. What is the significance of the percentage to businesses? None at all, really—a 2 per cent charge is a 2 per cent charge as far as business is concerned. In addition, as my noble friend Lord Jenkin just mentioned, the Government allow voting in all instances under the BID schemes, whatever the percentage contribution from businesses, so why not now with the business rate supplement? If the Government want to be consistent, they should allow voting in all instances for the business rate supplement, as they do for the BID schemes.
The whole point of the Bill is to raise money for local infrastructure projects that will benefit local businesses. Local authorities are expected to work in partnership with local businesses. There will be consultation but, as the Bill stands, that can be ignored. Local government can press ahead with a pet project despite the wishes of businesses. Business may not consider that the local authority’s chosen project is the right or best project for business in that area, but as things stand the local authority can override its wishes. What would concentrate the minds of local government is the knowledge that, at the end of the day, the project will be subject to a vote from the business community in all instances. It would also ensure that both parties really worked in partnership to ensure that the right project was selected.
My Lords, this is my first contribution to any stage of this Bill, so my remarks will be extremely brief. I represented a constituency in central London where, for many years before we reached the stage which we have now reached, and generally under the supervision of Mr Tony Travers, whom a number of noble Lords will know personally, I discussed the particular issues which we are embracing today.
Since everything that could be said on this subject, other than perhaps what the Minister is about to say in reply, has already been said, I will not go on at length; I will simply rely on two things that have been said before but are very brief. Neither exactly matches the case we are dealing with, but their spirit certainly does. The first is the old saying that help is always better defined by the receiver than by the giver. The second is the remark by that great Ulsterman, CS Lewis, that if you hear about somebody going around doing good to others, you can always tell the others by their hunted look.
My Lords, I am grateful to all the noble Lords who have spoken in this debate and particularly grateful for the kind remarks about my noble friend Lady Andrews from the noble Baroness, Lady Hamwee, and the noble Lord, Lord Bates. I am sure we will miss the contributions of my noble friend, who worked so assiduously on these matters and with such great precision. No one will miss her more than me as far as the Bill is concerned. I will do my best to respond to the issues that were raised. I appreciate that these are matters of concern but I do not think that there is a huge difference between the Government’s position and that of the noble Lords who have contributed to this debate. I give way to the noble Lord.
My Lords, I am in some difficulty because no announcement has been made, but let me assure the House that my noble friend Lady Andrews will be fulfilling a role in the public service of great significance and she will, I have no doubt, in due course earn the commendations of the House on that fact. However, the announcement has not been made and that is why I am constrained. It was not clear just when the announcement would be made and therefore to my enormous joy I was drafted in over the course of Friday and the weekend to deal with the Bill. That is why I am delighted to be before the House now. If all the questions are going to be as difficult as the one the noble Lord, Lord Jenkin, has just addressed, I am going to have a very difficult time indeed. I hope I am not going to be so evasive on all the other points.
I emphasise that, although I recognise that it is a key issue of the Bill, I do not think that there is a great deal of difference between the position adumbrated by noble Lords who have spoken and that of the Government. The issue is more a question of emphasis than one of principle. None of us thinks that businesses should not be involved in a BRS. We recognise that the policy will not work unless there is effective, constructive partnership between local government and businesses. The whole premise of this concept of any such project is based on that position. We have said that we of course expect levying authorities to engage with businesses early on in the development of any proposals and we would expect that dialogue to continue as the proposals are developed further. We are at one with the sentiment that is behind this amendment, that progress cannot be made unless business is involved in the development of the proposals and has a real say in these matters.
How this happens, we believe, should be left to the levying authority to decide. We do not see the case for being overly prescriptive with regard to local authorities but we have strengthened the statutory guidance by encouraging levying authorities to think about how they will engage with businesses over and above the necessary statutory consultation which is already envisaged in the measure. By engaging in this way, the levying authorities will be able to gauge how businesses feel about the emerging proposals before they are complete and to reflect feedback from businesses as the project moves on towards that more formal consultation stage which is involved in the process.
We should be able to leave local authorities to work responsibly with businesses to develop projects to benefit the economic development of the local area. It surely cannot be the case that the levying authority needs a ballot in every case. We have indicated that ballots are important where businesses are making a contribution above 33 per cent to the total position, but the approach we have adopted is that ballots must be proportionate and reasonable, bearing in mind that BRS revenues will contribute the lion’s share of project funding in some cases. In other cases, it may well be that the business rate supplement is a very small part of the project envisaged. The fact that we are not requiring a ballot in all cases does not mean that this gives levying authorities carte blanche to bulldoze through their pet projects. Businesses will have a vote if they are involved in more than 33 per cent of the expenditure, levying authorities will be required formally to consult with businesses on top of any preparatory dialogue they have, and with all proposed projects they can be held to account if they fail to carry out this consultation.
It is surely recognised that it is in authorities’ best interests to ensure that they consult businesses effectively, but if I have followed the position which has been put forward by noble Lords—it was certainly the burden of the case put forward by the noble Lord, Lord Jenkin, and the noble Earl, Lord Cathcart—that even where the proportion to be funded is fairly small, the danger is that this would put undue emphasis on one aspect of a project. I accept the point that talk of a veto is somewhat excessive, but noble Lords will recognise that a ballot for business, when it may be contributing as little as 10 per cent, certainly puts very considerable emphasis on a contribution which is relatively marginal to it. We have guaranteed that the authorities will have already engaged with businesses that are contributing 10 or 15 per cent and the development of the project will have had the benefit of businesses’ responses to the local authority consultation. I give way to the noble Lord.
My Lords, I do not, but a line has to be drawn somewhere. If the noble Lord concedes a contribution of 10 per cent ought not to occasion a ballot, then having listened to my careful arguments, he will not support the amendment before the House. If I say 33 per cent and he responds by saying that 32 per cent is only 1 per cent below and the ballot will be denied, logic dictates that one is faced with the same problem wherever the line is drawn. I merely indicate that there is a strong case for such a line to be drawn because where the contribution is relatively small, it cannot be logical or proper that local authorities which have carried out a consultation then have to go to ballot.
The business rate supplement provides a new mechanism for local authorities to work with businesses on projects that will enhance the development of local areas. We want authorities to be innovative in their use of this new power provided that a link to economic development can be demonstrated. It is for the authority to decide the extent to which BRS revenues should be used to fund a project, but it is probable that BRS will feature as just one part of an overall funding package. Surely, therefore, a local project backed by a range of funding partners should not be put at risk because of the uncertainty surrounding what might be a relatively small contribution to the overall funding package. By the same token, we do not want unnecessarily to constrain levying authorities in their use of BRS; we want them to use this power flexibly. However, there is a real danger that financial institutions and funding partners will not be willing to commit themselves where business has a vote on an element, even a small element, of the overall project. In effect, the BRS would then be used where it forms the lion’s share of the funding so that the whole project would stand or fall on the outcome of a ballot to which the funding partners do not have to be signed up. That is not what we are looking for. We want authorities to have a broader range and a degree of flexibility, and that is why we are against the constraints that would be imposed by ballots.
We have provided many safeguards in the Bill for the interests of business, lest it be suggested that just because I am arguing about the universal ballot in this case, we do not have the interests of business at heart. A ballot on a scheme is necessary where the BRS provides more than one third of the funding, and an overall limit of 2p per pound of rateable value is established in the Bill. The BRS cannot be used to fund statutory services. It must be used for additional developments for the benefit of the economic development of an area. Mandatory consultation is required in all cases and we have provided that the details should be set out in a prospectus, including a cost-benefit analysis. So business has safeguards built into the legislation when it enters into consultation with a local authority about these possibilities. It is right that such safeguards have been included, but requiring a ballot in all cases runs the risk that projects will be put in jeopardy or that local communities will miss out on opportunities of enhancing areas because of the difficulty of securing broader financial backing for much-needed developments.
I appreciate that the noble Baroness, Lady Hamwee, was somewhat guarded in her criticism of local authorities; indeed, all noble Lords who have spoken have shown some degree of respect for the position of local government. Local authorities are democratically elected bodies, so surely we should trust them to work responsibly with businesses on local projects and not shackle them with unnecessary requirements that are not needed given the other safeguards in the Bill. Accordingly, having listened to my case that this process will not work and opportunities will not be exploited unless local authorities work in close partnership with business, I hope that she will feel able to withdraw her amendment.
My Lords, I am grateful to all noble Lords who have taken part in the debate. I have to say to the noble Lord, Lord Davies of Oldham, that I did not think he was at all evasive in his response to the first question. I expected to hear that the noble Baroness, Lady Andrews, has a diplomatic sniffle, but apparently not. The noble Lord has been very honest and straightforward. He has been dealt a difficult—indeed, I think impossible—hand.
I shall pick up on a few points. The noble Lord talked about the importance of engagement with the business community. A vote in a ballot is the greatest form of engagement and is complementary to a preceding consultation but different from it. He said that a ballot should be left to the levying authority and that the Government do not want to be overly prescriptive, so why put in anything at all about it; why pick on one third? He also said that if the BRS is a small proportion, the whole agony would be irrelevant. It would have to be a necessary part because of the extraordinarily stringent tests to prove additionality that we know about from the guidance fleshing out the statutory requirement for additionality which has been issued so far. He said that BRS would be relatively marginal, which I think is the same point. It may be proportionately small for a particular project, but it will not be marginal. By definition, it has to be important.
The noble Lord said that banks might not be willing to fund if a project is dependent on a ballot. I cannot see banks being particularly happy if they know that there is going to be an uprising among the business community, with all the dangers that would present. He also said that we are showing a level of distrust of local authorities. That is simply not the point. As the noble Lord, Lord Jenkin, said, this is a point of principle. We are told that the line has to be drawn somewhere. I do not believe that there needs to be a line. I beg to test the opinion of the House.
2: Clause 1, page 1, line 7, at end insert—
“(2A) Regulations may amend subsection (2) so as to add to or to vary the purpose of projects for which money may be raised by a BRS.
(2B) The appropriate national authority shall consult the following on the draft of any regulations proposed to be made under subsection (2A)—
(a) representatives or membership organisations of persons who are non-domestic ratepayers;(b) representatives of local authorities;(c) such other persons as the national authorities think appropriate.”
My Lords, I beg to move Amendment 2 and shall speak to Amendments 5 and 29, which are grouped with it. As we discussed in the previous stage the Bill is, by definition, one for the long term. Amendment 2 would allow there to be variation in the purpose of projects to be funded by the business rate supplement. Under Clause 1, a project has to be one which the local authority,
“is satisfied will promote economic development in its area”.
In the current climate, I accept that focus, although in Committee I think that we agreed on all sides that one could attribute almost anything to “economic development”. Sir Michael Lyons himself, in the recommendations to his report, refers to,
“the impact of the supplement on the local economy, and the potential economic benefits of the spending they”—
the local authority—
“propose to finance from the revenues generated”.
That is not quite the same thing.
I would argue that environmental and social improvements in any event contribute to the economy of an area. When I was chairing the London Planning Advisory Committee—I think it was in about 1991—we commissioned some wide-ranging and deep research into the world-city status of London, and asked, “What makes a company decide to locate to a particular city?”. The quite clear answer was quality of life, something very wide that clearly encompasses environmental and social aspects. Is it not rather arrogant of us to say that businesses are only interested in economic development in a narrow manner? I do not know, of course, whether the Government will seek to overturn the amendment that your Lordships have just agreed, but if we can retain the ballot it seems to answer the issue of what the statutory purpose of BRS should be. I am not proposing an immediate extension, but it would be dotty not to facilitate that extension if the mood or climate is such that it should be extended.
My amendments are facets of the same issue. Amendment 2 would require consultation leading to regulations. Amendment 5 is one that we debated at the last stage, requiring,
“a periodic review of the use of … BRS”,
and that amendment has important provisions for representations to be made by anyone who is interested are. That amendment and what the review will report should come first, before any regulations provided for in Amendment 2. The Minister may tell us that such a review will happen in any event. The noble Baroness, Lady Andrews, whom I met last week to discuss this stage of the Bill, said that she was going to explain to your Lordships that, under other legislation, there would have to be a review. I hope that the Minister, if he is to pursue that line, can tell the House whether, on such a review, alterations to legislation can be made without more. I suspect not, which is why I am seeking, if not to require regulations, to allow for them.
In the last stage, the noble Lord, Lord Best, had an amendment—promoted in that case by the Local Government Association—that would have allowed for the variation, if not necessarily the increase, of the 2p limit. Again, my Amendment 29 would require consultation to precede any regulations that provide for such a variation—and my argument about the ballot is obvious. If this legislation is to support Crossrail, which is its major aim, by definition it must apply for some decades. We believe that it should be flexible enough, with the safeguards that my amendments include, to cater for those decades, not just for the present.
My Lords, I listened carefully to the noble Baroness, and I have no doubt that with an attachment, which I also have, to the London Councils she has taken fully into account its general support for these amendments. I have some sympathy with it, because it is pleading, over a long period, that the Bill needs to be a little more specific about precisely how consultation shall take place. Now, I know it is a common view in Committee that, as regards consultation, there should not be a long list of interested bodies that are entitled to be consulted. However, I would simply say that London Councils clearly have a deep interest in this, not only from the point of view of the councils’ size, stature and importance but because of their potential rate-levying powers.
As regards Crossrail, which will be a long-time involvement, if it is not already clear in the Bill, it is not unreasonable to ask the Minister to explain to us the mechanism that the Government have in mind to provide bodies like the London Councils, and any others which have a big interest, with the methods and manner in which they can be consulted. These amendments are not talking about a prescriptive power to be placed in the Bill, but asking that due note be taken of the great importance. The Minister would also help the House and many outside if he could spend a little time on precisely how wide the raising of a business rate can go. In other words, will it be open to separate councils? Will it be more widely available than it appears to be in the Bill? The Minister could help the House and London Councils there.
My Lords, I am sympathetic to at least some of these amendments. While beginning this process, at Second Reading and in Committee I put on record my interests as director of a number of businesses that pay business rates. I probably should have done that with the first group of amendments, for which I apologise; I certainly put that on the record now.
On the amendments that we support, anything that improves communication and information on business rate supplements clearly has to be welcomed. We have a problem with Amendment 29, which contains the notion of varying the cap on the business rate supplement of 2 pence; we already think that a very high burden on business. I know that the Minister, in responding to the first group of amendments, made the point that potentially relatively small sums will be involved, but the Local Government Association has calculated that if every authority used the 2p levy, then the total tax take would be in the region of £750 million, and possibly even more than that in 2010 after the rating revaluation takes place. These are significant sums. It is in the nature of taxation that when someone applies an upper limit, there is a tendency to go up to that limit. One also needs to remember—I am sure that the Minister will want to make this point—that the figure is a maximum, not a minimum.
There is an issue that we feel strongly about, and I want to put it on the record. The noble Baroness, Lady Hamwee, talked about what attracts businesses. Business rates are either the second or third biggest charge faced by most businesses, and we know from experience in the 1980s and 1990s, with initiatives such as enterprise zones and the like, that when you offer a business-rate-free zone, that becomes attractive to businesses. Given that business rates have a major impact on businesses locating in particular areas, we would have liked the Government to consider the notion, which we would have supported from these Benches, that funds from the levy could be used to discount business rate bills.
There are various reasons why businesses might locate in a particular area. People might want to use the funds raised through the business rate supplement to discount the cost of business rates, which are an incredible burden on many businesses, particularly as a result of the increases that have already been levied this year. Although the 5 per cent increase has been deferred for a year, that additional 3 per cent will be levied on businesses next year. Next year there will also be the rating revaluation, so this is becoming a bigger issue.
We would have thought that in those circumstances, being able to say to people, “Listen, you can raise funds through the business rate supplement and you can actually use them to discount the cost of locating and operating in your particular area” would be a sensible use of that facility. If the aim is to promote economic regeneration, we on this side of the House—and we would expect there to be some sympathy on the other side of the House, given the body of evidence for this—suggest that lower tax rates tend to stimulate exactly that. And if that is the aim, anything that lowers tax rates has to be a good thing.
From that point of view, we are basically sympathetic to the spirit of these amendments, although in the case of Amendment 29 we would have serious reservations. If there were an additional level of flexibility, allowing it to be used to cut the excessive burden of business tax, we would be minded to support it more than we shall be.
My Lords, I moved amendments to similar effect in Committee and I support these, particularly those in Clause 14. I made the point on behalf of the Local Government Association, of which I am proud to be president, that although the level of 2p in the pound will raise a fairly large sum in pound terms, it will raise quite a small proportion of revenues for local government—something like 5 per cent of the money raised by the business rate alone, not 5 per cent of all the revenue raised for local authority spending. I see the supplement not so much as a tax burden as a collective means of paying for goods, services and projects that the local community wants. If this mechanism for raising money for important local projects turns out to be successful—we hope that eventually it will be, although we know that at present no local authorities are planning to move swiftly forward with these measures—it will be helpful if one does not need primary legislation to raise that amount of 2p in the pound to a higher sum at a later stage. The amendment would create something in advance of its requirement and well in advance of anyone wishing to share this load with the business community, and is helpfully trying to ensure that legislation puts it on the record now.
My Lords, I am grateful to all noble Lords who have spoken in this brief debate. I noticed one or two cross-currents in the debate: I heard the noble Lord, Lord Bates, say that he was broadly in favour of the spirit of the amendments, but he then produced some hefty reservations about Amendment 29 which I actually share. Noble Lords have argued, though, that there should be potential in the future to use BRS funds to invest in a wide range of community interests, which is what Amendment 2 seeks to do, rather than simply being limited to economic development, although, as noble Lords appreciate, “economic development” can cover quite a wide range of possibilities.
It has always been the aim that the business rate supplement would be a pool that could be used to promote the economic development of local areas, hence the link to business rates as opposed to other forms of rating revenues. That is a clear theme that runs through the Government’s subnational review, the White Paper that preceded this legislation and now the legislation itself. The link to economic development provides an important reassurance to local businesses that BRS will not be used to fund services that have little or no relation to them. BRS is intended as a tool that can be used to fund joint projects between local businesses and local authorities. It will be a means of raising additional revenue from businesses.
I accept the point that the noble Lord, Lord Best, made: it is not a tax but the raising of funds for joint enterprise in which all wish to share and the outcome of which is meant to be for the benefit of the locality. It is logical that the BRS should be linked to the aspect of the local community that will be of most interest to local businesses, which is, inevitably, economic development. That is the premise behind the Bill.
The concept of “economic development” is clearly understood. It has been explored in the subnational review and, subsequently, when appropriate implementation of the actions put forward by that review was being considered. We should not overlook the fact that the term “economic development” gives levying authorities and local businesses adequate scope for innovation, which is what we want to see from the Bill. Outside the core services that levying authorities should provide, BRS can be used flexibly and constructively to promote economic development in the local area. We did not limit the use of BRS to only one kind of project; instead, we have acknowledged that what is necessary will depend on the judgments of the local area, so there is considerable flexibility behind the concept of the legislation.
Amendment 2 would risk distorting the unique purpose of BRS. Depending on the regulations laid under the amendment, BRS could be used on projects for aims more aligned to cleaner, greener or safer agendas which, while they would bring some indirect economic benefit, would not in the normal sense of the term be “central” to economic development, which is the thrust of the legislation. Of course businesses already contribute to the provision of services such as social services and street cleaning through the national business rate, but BRS is meant to be a new tool for raising revenue to invest in local areas over and above the provision of services and projects already provided. The Bill already provides local authorities, working with local businesses, flexibility in how they use these resources to tailor the project to maximise economic development for their local area.
I agree with the sentiment behind Amendment 5. It is vital that legislation is reviewed so that if something is not working as well as we had hoped, identified and appropriate action can be taken. As the noble Baroness, Lady Hamwee, was generous enough to indicate, the Government are already committed to post-legislative scrutiny, so that all Acts must be reviewed between three and five years after Royal Assent. This requirement applies to all Acts that received Royal Assent during or after 2005, and this Bill when it becomes an Act will fall within that framework.
The review will involve considerable activity on the part of the department submitting a memorandum to the relevant Commons departmental Select Committee. It will include a preliminary assessment of how the Act has worked in practice, relative to the objectives identified in the Bill. Following consideration of the memorandum, the Select Committee could then decide that a fuller post-legislative review of the Act was required, which would be carried out in the same way as other Select Committee inquiries. So we do not need an amendment to scrutinise Bills subsequent to their enactment.
As I indicated, I did not think that the support of the noble Lord, Lord Bates, for Amendment 29 was whole-hearted and nor is mine. The amendment seems reasonable enough. It would allow the Secretary of State to vary the supplement’s upper limit to reflect the state of the economy. During the good times, businesses might be expected to pay higher BRS than during a recession. However, the Bill needs to balance protecting the interests of business with the ability of levying authorities to raise meaningful sums of cash. The 2p limit strikes a balance between reassurance and meaningful practical application, bringing necessary resources forward. A set limit guarantees businesses the maximum that they can be expected to pay. If the amendment were accepted, businesses would no longer have the assurance of a maximum level, as the upper limit would potentially be subject to change over time. What about projects already under way? They might be subject to the potential for flexibility in resources available to them, increasing uncertainty. I therefore hope that the problems with that amendment are appreciated.
My noble friend Lord Graham asked about consultation, which I dealt with in an earlier amendment. He will know that provision for statutory consultation is written into the Bill and how important that is. He is right: local authorities are the actors in this situation, which is why we need to make sure that they are fully apprised of their opportunities. However, we are going beyond that by producing additional guidance to strengthen consultation to ensure that local authorities know what their obligations and opportunities are and that they consult adequately with the interests whose support they need to attract. Inevitably, very important among those is the business community, because it is being asked to contribute the business rate. I want to give my noble friend reassurance on that score.
These are interesting issues, which I know are being raised as part of a constructive approach to the opportunities that the legislation envisages, but we think that we have got the balance right. I hope that the noble Baroness now thinks that the Government have thought about these issues and that she can safely withdraw her amendment.
My Lords, the amendments are indeed intended to be constructive, and the Minister should read into them our support for the Bill generally. I understand the wariness of the noble Lord, Lord Bates, of Amendment 29. One is accustomed to hearing that rates can go up as well as down; in this case, they can go down as well as up—that is the point of the terminology.
The noble Lord, Lord Best, expressed my intentions extremely well. I thank him and all other speakers for that. I say in response to the Minister that the ballot will be the safeguard.
The Minister referred, as I knew that he would, to the statutory requirement for a review and post-legislative scrutiny. Can he refer us to the legislation which requires that? If he is not able to do it today, perhaps it could follow this debate—he nods at that. It does not, however, wholly answer my point, because, as I understand it, primary legislation will still be needed when there is post-legislative scrutiny, even if the scrutiny recommends the kind of changes that I am proposing.
However, I am realistic enough to know what the government response to these amendments would be were we to win them when the Bill goes back to the Commons. I shall therefore pause while we are ahead on Amendment 5. I beg leave to withdraw the amendment.
Amendment 2 withdrawn.
Clause 2 : Levying authorities
3: Clause 2, page 1, line 17, leave out paragraphs (b) to (d)
My Lords, I shall speak also to Amendments 4, 10, 14 and 38, standing in my name and that of my noble friend Lord Cathcart. The amendments highlight concern on this side of the House about the legislation full-stop. Our argument is that the legislation should have been restricted to London. It was designed and conceived as a mechanism for bridging the funding gap for Crossrail. Crossrail’s £15.9 billion of funding was calculated, in negotiation no doubt with the Treasury, to include a business rate supplement in the region of £3.5 billion. We on this side of the House and the Mayor of London, whom we are happy to support in his ambitions for the capital city, see Crossrail as a major infrastructure project which should have been commissioned far earlier and desperately needs to go ahead. It requires some additional support from businesses. It was subject to debate during the mayoral election, where it was a principal part of a manifesto commitment. This legislation should therefore have been wrapped in, isolated and linked totally to the Crossrail project, because to move out beyond it looks suspiciously like an additional tax.
A number of areas of government funding used to deal with economic regeneration and, to an extent, still do. The local authority business growth initiative, for example, provided about £1 billion per year to improve and stimulate economic regeneration in many of the areas in which it is claimed the business rate supplement is now needed. That £1 billion over the past three years has been reduced to just £150 million over the next two years. We are already seeing the invisible hand of the Treasury at work, because, on the one hand, the local authority business growth incentive scheme is being wound down by an amount close to £850 million while, on the other, we see, miraculously, the business rate supplement being ratcheted up and rolled out more widely to provide potential funding of up to £750 million.
This is a great concern that we have: when this particular measure was considered and conceived, it was in a wholly different economic environment and climate to the one that we are now in. Now, businesses up and down the country are struggling for breath to keep afloat in very testing economic times indeed. The business rates that are already there—whether it is non-domestic rate revaluations, the increase of 5 per cent, albeit spread over two years, congestion charging, parking charges; all of these taxes—stealth taxes—which were levied by the Chancellor to raise revenue from businesses during the good times are now very much the ones which are sinking many businesses, including other iniquitous taxes, such as empty property rates.
This is in the same genre as empty property rates. It is one of these initiatives which were conceived in times of economic boom—so the Chancellor and the Prime Minister would have us believe—and are now being levied in times of bust in this country. Therefore, a very strong case is represented in these amendments, which we wish to pursue. This is a piece of legislation which should always have been linked to a specific, major, vitally important infrastructure project in the capital city and should not be levied outside it. I beg to move.
My Lords, I do not think that the noble Lord will be surprised that I am not with him on this one—as we were not in the Commons. Actually, I wrote against the first of his amendments, “So you don’t support the Lyons review”. I am not sure whether that is an entirely fair response—or perhaps it is a fair but incomplete response. We have made it clear throughout the debates on this Bill that we support the concept; were that not so, I would not have been seeking to extend the provisions of the Bill in the way that I just have.
This is not just about London. One gets rather weary of people outside London thinking that those of us who live in this particular bubble are really only concerned about London. I do not want to be London-centric on this one. This Bill provides a mechanism which may not be used next week or next year by local authorities outside the capital—sadly it is not available to be used by the London boroughs because of the way this is constructed, but there we are—but a mechanism which I hope local authorities will find ways that perhaps none of us has thought of to use the BRS for the benefit both of their business community and their wider community. I think that the amendment goes against the whole concept of the Bill to confine it in the way that the noble Lord suggests.
My Lords, I shall be very brief. I hesitate to say this in the absence of the noble Baroness, Lady Andrews, whom I wish extremely well in whatever unknown circumstances she now is, but I recall, as the noble Baroness, Lady Hamwee, will recall, having attended the Committee and remaining stages of Bills over which the noble Baroness, Lady Andrews, presided, that at the time of the housing Bill, I allowed myself the comment on the very day that the Governor of the Bank of England was suggesting for the first time that there was a possibility that we might be in a recession, that those remarks sat somewhat forbiddingly over the optimism which the noble Baroness, Baroness Andrews, was expressing about the economy at the present time, and we returned to it later in one of the Bills this year. I do recall on that occasion that her defence of her position was that there was not a recession occurring at that moment.
I entirely endorse, therefore, the remarks of my noble friend Lord Bates that in so many of these areas we are looking at legislation which was being carved out and conceived in much more favourable economic times than we are now enjoying, and it is a mistake if we carry on thinking that in fact all is going to be well, when at the moment there is still no dramatic evidence that that is so.
My Lords, if we constructed legislation on the basis of any immediate stage of the economy, we would have some very interesting legislation indeed. The noble Lord, Lord Brooke, will readily recognise that the process of legislation, from the initial concept to gestation and actual completion is a prolonged one. The idea that under normal circumstances one could cope with the vicissitudes in the economy is a little unrealistic.
I recognise the point that he makes—that this Bill is about economic development and therefore that requires a degree of optimism. We are not going to deliver this Bill, nor are local authorities going to respond to this Bill, in the next three months; it will take time. It is right, as the noble Lord, Lord Bates, indicated, that the concept behind the Bill, the original concept, related to Crossrail—a very important project and a very important concept—which is at the heart of this Bill, but the Government would be failing in their duty if they did not, even in difficult circumstances, enact legislation that constructs opportunities for local authorities and for communities. After all, I hope noble Lords are not saying that, because there is a recession on at the present time, they have given up on every conceivable initiative in business, and that they cannot think of a single area in which any development or progress is being made. If they do suggest that, they have got a rather more blighted view of this recession than any economists I can think of. So I am not going to accept that; I am going to state that of course it is entirely right that the Government should be constructive about this legislation.
Of course I respect the noble Lord, Lord Brooke, with his enormous commitment to the City of London, and I recognise therefore that he latches onto London-centric legislation in its genesis. I just remind the noble Lord, Lord Bates, if he did not notice, that I have endured over the past 24 hours the Conservatives extolling the fact that they have scored the largest number of votes in Wales. Here is a piece of legislation which relates to Wales in a constructive sense—and what is the stance of the Conservative Opposition? It is to say, “We do not think you should have any opportunities; the only opportunities are those which are reserved for London”. That is a splendid way of rewarding the people of Wales for their, I hope, short-term perspective in which they have given some support to the Conservative Party. It will not take them long to learn the wisdom of their ways.
I say this as far as this legislation is concerned. The legislation is enabling legislation: no local authority is compelled to take action. It is enabling. It gives local authorities the opportunity where a local development can take place—economic development in which business can play its part and wishes to play its part. That is the whole point about the necessary consultation and support. I maintain that even in the darkest days, it is still the case that enterprise shows its desire for opportunities. Local authorities should spend a great deal of their time concerned with enterprise, business development and economic development in their localities. They all ought to direct their attentions there, particularly in these difficult times, when we need to recover. This legislation will assist. That is why, on this occasion, I am asking the noble Lord, who has tried to persuade the Government of the virtues of the legislation, to withdraw the amendment.
My Lords, I thank the Minister for his invitation. On the subject of Wales, the point which seems to be at odds here as we bask in our position of having secured the greatest popular vote for the Conservative Party in the Principality of Wales since 1918 is that—
My Lords, my noble friend should not ignore the fact that the last occasion on which the Conservative Party gained a majority of parliamentary seats in Wales was in 1859, exactly 150 years ago. It is therefore a very good omen for coming events.
My Lords, my noble friend's grasp of history and his wit and insight are the things that we look forward to. I would add only this. The thing that will secure our position not only among the Welsh people but in the other parts of the country and also in the north of England is that we are protecting them from a tax increase. We reject the notion that the best way of advancing our newfound prominence in those regions outside London—in the south-west and in the north; in fact, it is difficult to think of a region where we did not make advances—is to levy a tax on those people, when there are many other vehicles by which that economic regeneration could be happening. For example, there is the money going from the central Exchequer into the regional development agencies. There is the business rates levy. There are business improvement districts. There is a local authority business growth initiative. Business taxes many and plenty are being levied to promote economic regeneration, which is desperately needed at this time.
I found the Minister's response less than convincing. As such, I should like to test the opinion of the House on this issue.
Clause 3 : Use of money raised by a BRS
Amendment 4 not moved.
Amendment 5 not moved.
Clause 4 : Conditions for imposing a BRS
Amendments 6 to 9
6: Clause 4, page 3, line 25, leave out “where there is to be”
7: Clause 4, page 3, line 25, after first “ballot” insert “has been held of the relevant persons”
8: Clause 4, page 3, line 25, leave out “the ballot has been held”
9: Clause 4, page 3, line 26, after “approved” insert “by a majority as set out in section 8”
Amendments 6 to 9 agreed.
Clause 5 : Prospectus
Amendment 10 not moved.
11: Clause 5, page 3, line 37, after “prospectus” insert “and a summary of it together with an easily understood explanation”
My Lords, I will speak also to Amendments 12 and 13. The amendments are retabled from Committee with an addition inspired by the noble Lord, Lord Bates, which I will come to in a moment.
They are mild little amendments, and I have been very surprised at the resistance that the Government have shown to them. They simply provide that, under Clause 5, when prospectuses are published, either in hard copy or electronically, they should be accompanied by a summary and what I have described as an “easily understood explanation”. This was inspired by the noble Lord, Lord Bates, who said that it would be sensible if local authorities produced FAQs—frequently asked questions—and their answers. I thought that the PPO might have a seizure if I used the term “FAQs” in an amendment, so this longer group of words is the synonym.
Amendment 13 provides that copies should be made available not only at the principal office of the levying authority—that would be City Hall in the case of London, county halls elsewhere—but also locally at the principal offices of the relevant billing authorities. In London, this would be at the main offices of the London boroughs. In other areas, it would be the district offices.
The Minister at the previous stage said that the Government did not want to overprescribe, and in general we support that. However, the Bill must look first to the interests of the consumer—the ratepayer. The arguments against these amendments in the Commons were not persuasive, and our Minister, if I may put it that way, had to defend something that was not only indefensible but frankly not worth defending. The reference to summaries is included because the prospectus will be a technical and probably pretty heavyweight document, and should be accompanied by something that is short and with which ratepayers can get to grips without difficulty.
The third amendment concerns its availability more locally. It will still not be available in many places. There will be the web—I dare say that most businesses liable to the BRS will naturally look to the web for information. However, if a hard copy is required—and the Government seem to think it is, because they are providing for hard copies—its availability should be more local than the Government seem to think is necessary. It really is a token gesture to have a hard copy available at the principal office of the levying authority, given the distances that in most cases would have to be travelled.
These are modest and mild amendments. It is beyond me to understand why they have provoked such resistance. I beg to move.
My Lords, I am delighted to support the amendments. I do not have a great deal to add to the words of the noble Baroness, Lady Hamwee. However, I will make a few points about easily understood explanations.
The amendments take on a new significance in the light of Amendment 1, which has been passed, because we now hope to find that businesses will be asked their opinion on all of the schemes that are put forward. Therefore, they will need an easily understood explanation. The discussion in Committee was well informed, contained lots of ideas and was genuinely constructive in coming forward with proposals. The point was made that, in tough economic times, officials in government departments, and even officials in local authorities, may have the time to construct, read and digest the implications of a 100, 200 or 300-page document and prospectus, complete with various legal and contractual requirements and the financial statements that will be there alongside the details of the scheme. However, if you are a business person who is struggling to make ends meet and to get through very difficult times, you are unlikely to want to print off 300 pages and read through them. Therefore, the requirement to provide a succinct summary that communicates the essential elements of the proposal seems to us an eminently sensible idea which most people would support.
When we discussed this in Committee, the noble Baroness, Lady Andrews, gave as one of her arguments for not accepting the proposal the desire not to prescribe to local authorities how they should conduct this whole process of communicating with business rate supplement payers. However, Clause 5, headed “Prospectus”, contains several statements about what should be contained in the prospectus and how it should be presented. It states that electronic copies should be provided on the website and that a levying authority should,
“make copies of the published prospectus available for inspection at its principal office at all reasonable times of the day”.
That is quite a micro-level of stipulation as regards what should happen with the prospectus. Therefore, I do not think that the Government’s arguments as presented in Committee stand up to careful scrutiny. These are very sensible amendments. I should have thought that if the Government want to ensure that these business rate supplement schemes are successful, the best way to do so is to ensure that people have the right information in the right proportion which answers the questions about which they are concerned. I should have thought the Government would want to accept these amendments in a sense of enlightened self-interest rather than refuse them. They are perfectly reasonable amendments and I am very happy to support them.
My Lords, I am grateful to noble Lords who have spoken in this brief debate. Of course, the Government wholeheartedly support the principle behind this group of amendments; namely, that levying authorities’ prospectuses must be easily available and clearly understood. As my noble friend set out in Committee, the Bill contains a minimum framework of requirements on levying authorities in terms of their prospectuses to leave room to make the right arrangements locally. We continue to believe that this is the right approach but nevertheless we have no hesitation in subscribing exactly to the principles that the noble Baroness and the noble Lord emphasised in speaking to these amendments. We continue to believe that it is right that the Bill sets down a minimum standard. We undertake to review all the debates, including this one, which is an important contribution. We had an extensive debate in Committee and these issues were also debated in the other place. We will look at all those debates and at the representations we have received on the issue and consider the guidance which should be given to authorities under the Bill about the responsibilities to which they must have regard in relation to their prospectuses. I hope that the noble Baroness will accept that we have responded as positively as we can to the points that she made, and that she will feel content to withdraw the amendment.
My Lords, it must be such a difficult job being a parliamentary drafts person, and a Minister defending a draft and not wanting to have the ignominy of giving way, even on a little point such as this. I suppose that I have been there in another life. That is a pity but I am very grateful to know that guidance should extend to this. The noble Lord did not quite confirm that but said that the Government would look at the points. This is not a party political point. I am not trying to cause the Government to fall over it. It is simply common sense, but common sense also tells me that I had better beg leave to withdraw the amendment.
Amendment 11 withdrawn.
Amendments 12 to 14 not moved.
Schedule 1 : Information to be included in a prospectus for a BRS
15: Schedule 1, page 21, line 11, at end insert—
“The authority’s estimate of the costs of maintaining and operating the project and how they are to be funded.”
I wish to speak also to Amendments 17 and 18 standing in my name in this group. Amendment No. 16A in the group stands in the name of the noble Lord, Lord Bates.
These amendments deal with the contents of the prospectus in Schedule 1. Amendment 15 would require the inclusion in the prospectus of information about the costs of maintaining and operating the project and the funding of that. These are important matters for rate payers. They are likely to want that information in order to assess the project. Their assessment of its viability must extend beyond simply, in the case of a capital project, something material and concrete—I do not necessarily mean that literally—to something beyond the construction of it. A project will not work unless its operation has been thought through. Paragraph 3 of Schedule 1 says that the prospectus must include:
“A description of any work”
which the local authority has undertaken on the feasibility of the project. This amendment would require that work to be undertaken. Paragraph 5 deals with the authority’s assessment of the impact of the BRS, its benefits and the relationship between the information given about the impact and the benefits. However, these assessments do not extend as far as the provisions of my amendments; they do not quite cover the issue. In Grand Committee, the Minister said that if the levying authority plans to use the BRS for maintenance and operation, it will need to set that out in the prospectus. I accept that but that is not the point of my amendments and is not what I am driving at here.
Amendment 17 would provide for an explanation of the proposed project management—something that I think most businesses would be interested in—and of how the project, when completed, is to be managed and its governance arrangements. The amendment that I tabled in Grand Committee was obviously not sufficiently clear as it was answered as if I was proposing that there would always be a special purpose vehicle. I am not proposing that. Sub-paragraph (b) of Amendment 17 states:
“the governance and management … (if any dedicated arrangements)”.
Amendment 18 states:
“A description of the arrangements to … keep ratepayers informed … and to enable them to make representations to the authority”.
The arrangements about making representations are crucial and would be a significant addition. A good local authority will allow that anyway. This is more than can be covered by guidance about the provision of information. Making representations and allowing for them have different requirements.
The noble Lord, Lord Bates, will speak to Amendment 16A. I am flattered by the replication of some of my terminology, but not quite flattered enough to be able to support the requirement for the representation of ratepayers on the governing body. That is not appropriate. At the previous stage I likened ratepayers to shareholders. I accept that shareholders vote on who is on the board and can make representations. In this model, one would expect that, if investors or third parties are involved, they would have contractual rights but would not be part of running the show unless that is part of the deal that they have made to give the loan, or whatever form their investment might take.
I also wonder whether it would be possible for an individual to act as a representative, or even a delegate, of all businesses in the area. I hope that the noble Lord can cover this. There will be quite a range of interests concerned and this will not be easy. Indeed, it may have the seeds of something a little dangerous if one is persuaded that, by this sort of arrangement, the interests of ratepayers can be hived off in some way and represented by a board member, or even two board members. The interests of ratepayers should run through all decisions and not be regarded as something tacked on, with lip service paid to them. I beg to move.
My Lords, I support the amendments that have been spoken to by the noble Baroness, Lady Hamwee, and will speak to Amendment 16A, which is in my name and that of my noble friend Lord Cathcart. I will deal with the broad principle of what we are looking at here. Having businesses involved in the process from beginning to end, at every stage—and not only in the consultation process, which will take place before a ballot of businesses—is important for two or three reasons.
First, it is just good practice for people to contribute to the scheme. The Minister referred to giving comfort to banks if capital-raising was involved in the scheme. The banks might take comfort from various aspects of the difficulties involved in raising additional funds. I would have thought that the banks would certainly be comforted to see strong representation on the board of the body—whether it is a committee or council—of the business community. This shows that it is not just paying lip service and that they are there not only as token representation but to give meaningful input. The business community brings great expertise in the whole area of financial management, project management and procurement. If the objective of this legislation is economic regeneration, as the Government keep reinforcing, surely there are no better people to articulate what will work in improving the business environment than the businesses themselves. We would like to see that.
We had a detailed debate on this in Committee. Several points were raised. Essentially, they distilled down to the purpose of this amendment. The Minister gave pretty categorical assurances, as the record will show, that there would be absolutely no question but that businesses would be expected to be involved from start to finish. She reiterated at col. GC 521 on 18 May 2009 that this was the case. Her expectation was that businesses would be involved at every stage. Our response was, perhaps, a fraction prescient. We said that, although a clear assurance was given by the Minister at the time and she is absolutely trustworthy on these matters, Ministers move from time to time, at the behest of the Prime Minister and to other opportunities in government. Therefore, one of the advantages of having such a provision in the Bill is that it will give some continuity. In many ways, that concern has been reinforced in light of the events that we have heard about.
Amendment 16A recommends two things. First, it mentions accounts being made available for the project as a whole and to keep the budget in check. That would be sensible. Those elements are really the only two that add anything to the amendments that have been tabled by the noble Baroness, Lady Hamwee. As well as the financial statements, it recommends representation on the board, which should be regarded as entirely helpful. It is something that, in Committee, the Minister gave the warmest possible support to, in principle. Perhaps, when the Minister responds, he will make similar warm noises. I am afraid that for the reasons I have outlined, the structure for the engagement of the business community in the project throughout is so important that it should be in the Bill, and I give notice that if the Minister’s response to Amendment 16A proves unsatisfactory, I will test the opinion of the House.
My Lords, I am grateful to both noble Lords for moving and speaking to their amendments. The noble Lord, Lord Bates, indicated how strongly he feels by suggesting a possible Division of the House on his amendment and I hope that I can assuage his anxieties on that score.
We have considerable sympathy with the sentiments of both noble Lords. The issue is whether the Bill needs to be amended to give effect to their points. The Government have thought seriously about these issues and the way in which we envisage the legislation being enacted meets noble Lords’ points. Of course levying authorities will need a wide range of information in the economic assessment of their proposals to be included in their BRS prospectuses. I am happy to put it on record that we expect that assessment to include consideration of the long-term viability of projects—something that businesses will be and should be only too ready to press authorities on. It cannot be expected that businesses conduct themselves without being reassured about the viability of the project and its longevity. I can also reassure noble Lords that ongoing running costs will, under the guidance which we have issued, be included in the assessment of total project costs for the purposes of determining whether a ballot is required. Business will be fully informed on that front. I want to provide reassurance on Amendment 15 in those terms.
Amendment 16A, to which the noble Lord spoke, and Amendments 17 and 18, which revolve around the same areas, require the levying authority to set out in the BRS prospectus the proposed management arrangements for a project’s lifetime, and for when it has been completed. It is crucial that businesses feel that they can have confidence in the running of the project, but I do not consider the amendments to be necessary to provide this assurance. In fact, the amendments are overly restrictive and do not reflect the fact that each BRS is likely to be unique. After all, we considered an amendment a moment ago which sought to restrict the BRS to London and Crossrail. The noble Lord thinks that the BRS has unique factors. In fact, he would have restricted it to one feature. No, we want the BRS to be more available than in that example, as I indicated in my response to the proposal at that time. However, we recognise that each BRS is likely to be unique and, therefore, it is difficult to be prescriptive about what information is required in quite the way that the noble Lord and the noble Baroness suggest.
The use of the BRS is likely to vary in terms of the type of project that the supplement will fund and the proportion that the BRS will contribute towards the total cost of the project. Requiring levying authorities to set out the proposed governance arrangements, once a project is completed, appears to assume that the BRS will always be used to fund, or part fund, infrastructure projects. However, in some cases, it is important that infrastructure built by use of the BRS be maintained. There is no point in building the infrastructure in the first place if there is no maintenance in the long run. That is the burden of the noble Lord’s anxiety. However, we envisage that the BRS may be used for entirely different projects, including revenue projects and for training. They may not necessarily have a legacy that involves ongoing project management and governance arrangements. Why should we be so prescriptive that local authorities can undertake with business partners only a narrow range of projects? Surely we want to make this Bill succeed and to give some flexibility on that front.
Therefore, determining what, if anything, will be the ongoing needs for the management of the project can be decided only on a case-by-case basis. We need to provide levying authorities with the ability to respond flexibly to the needs of individual projects and that is why we have eschewed the concept of being overly prescriptive in the legislation. I hope that noble Lords opposite who have moved and spoken to their amendments in good faith—I respect their concerns about these issues—will also respect the Government’s position and why we need to preserve flexibility.
The BRS prospectus will make it clear how those paying the supplement can expect to be kept informed about how much revenue has been raised in the BRS and how it has been spent. Paragraph 11 of Schedule 1 requires levying authorities to make it clear in their prospectus how those liable for the supplement will be informed about the expenditure incurred on a BRS project. The obligations on the levying authorities are quite clear, therefore, and we have them in the legislation.
Local businesses will also understand how they will be kept abreast of the progress being made. We intend to ensure that, which is what the amendments seek. We are fully seized of the necessities that the noble Lords have suggested. The fact that the arrangements will be set out in the prospectus provides local businesses with an opportunity to give feedback on the proposed arrangements for sharing information about the progress of the project.
We expect that successful BRS projects will be developed in partnerships. That is the best guarantee of the flow of information between the partners and that all those who are playing their part are fully apprised of what is involved. The appropriate level of managerial involvement with any project will depend on the specific circumstances of each individual project. To attempt to control the Government’s arrangements could lead to an overemphasis on the BRS aspects of a project. This could result in other aspects of project governance related to other funding streams not being as good as they might be.
I understand the concerns. It is not that the Government have not thought about these issues very seriously indeed. We want, however, to avoid overprescription and, although I cannot agree with the amendments because I believe that the Bill makes adequate provision, I agree with the logic and principles underpinning them. The Government intend to signal in guidance that levying authorities should clearly share their information in an open, timely and clear manner throughout the project and consider the right role for business in the delivery of the project. These, after all, are based upon partnership and business will in many instances have a crucial role in governance. I do not think, however, that in legislation which covers a range of projects which we cannot foresee in detail and which might embrace a range of concepts, we can or ought to be prescriptive. I hope that the noble Baroness will therefore consider that she can safely withdraw her amendment.
My Lords, before the Minister sits down, I am not sure whether he addressed proposed sub-paragraph (d) of Amendment 16A, which refers to,
“those paying BRS to be represented upon the governing body of any organisation set up for the purposes of delivering the objectives of the BRS”.
Projects will vary. That will inevitably be the case in most projects we can envisage because it is quite clear that businesses will have an interest in the management. They will have a right to leadership in the management. After all, they will be making a contribution, and we would expect that to be the case. We are asking the noble Lord to accept that if we are prescriptive in the Bill, we will set up a particular form of management structure which may not obtain in all cases, particularly as we are not prescriptive about the level of contribution that the BRS might make to the overall project. The moment we get into any attempt at definition of participation in that formal sense, therefore, we are involved in being prescriptive in a way which the Government seek to avoid. It is not because we cannot see how partnerships could develop without a recognition of the role of governance in most cases, but if we put it in the Bill, we have to cover every case in circumstances where a wide variety of projects is likely to be put into effect.
My Lords, I am obviously glad to hear about guidance. With regard to my Amendment 15 about the costs of maintenance and operation, any authority with its wits about it will include that information and take the consequences by way of the businesses’ response if it does not.
I was seeking hard to preserve flexibility, which is why my Amendment 17 refers to,
“arrangements (if any dedicated arrangements)”,
and to reflect the case-by-case nature of these arrangements, to which the noble Lord has alluded. I am certainly not envisaging the BRS funding only capital construction. The noble Lord said that capital programmes would not be embarked upon without the maintenance being thought through. Oh dear, I do wish that were the case but sadly that is not always so.
According to my reading, the schedule is not sufficiently extensive to cover the points that I have made. I do not want to use the word “nannying” but the noble Lord was very protective of the amount of work that ratepayers would have to do in getting to grips with the prospectus and he urged me not to add to it. However, I think that the prospectus will inevitably be complex—it will not be adequate for its purpose if it is not.
As regards the amendment of the noble Lord, Lord Bates, although he did not directly answer my question about whether one or two individuals could represent all businesses, I think that the implicit answer to my question was, “Yes, they can”. The noble Lord is nodding and that is on the record. I am interested in the Minister’s response. He castigates the noble Lord for envisaging only a single governance model, but the noble Lord’s amendment—I am arguing against myself here—refers to the,
“governing body of any organisation”.
It does not say “the organisation” but “any organisation”. It then goes on to talk about being involved in the oversight of the delivery. I leapt to the defence of the noble Lord’s drafting but I do not agree with the underlying concept, which is a pity because I obviously agree with other bits of the amendment. Therefore, if he divides the House on it, although I hate doing this, I think that we have little option, as we would like to go a bit one way and a bit the other, but to stay put. However, I hear what the noble Lord says on my Amendment 15 and I beg leave to withdraw it.
Amendment 15 withdrawn.
16: 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 (c. 1).”
My Lords, noble Lords who took part in the Grand Committee will recognise that this is the same amendment that was tabled then—on that occasion by my noble friend Lord Brooke, and I added my name to it. In the event, my noble friend was unable to move it and I did so myself.
I tabled the amendment again late on Thursday, shortly before five o’clock, because I was expecting to receive a letter from the noble Baroness, Lady Andrews. It had been promised by her private office but by a quarter to five it had not arrived and, as the noble Lord will be aware, the rules of the House require that if this amendment was to appear in the first Marshalled List to be published on Friday, I had to get it in before five o’clock. That is the only reason that I tabled it—it was due to the circumstances. However, I subsequently received the letter and, having read it, I am extremely glad that I retabled the amendment. The letter was very unsatisfactory, as I shall explain in a moment, and I think that we need an opportunity to examine the matter further.
The amendment seeks to clarify the extent to which a voluntary financial contribution made by a business to infrastructure schemes is tax deductible as the business expands under the Income and Corporation Taxes Act 1988. As I explained in Committee, this amendment is primarily aimed at the Crossrail project, which has long been supported by the City of London Corporation and for which the City agreed, as part of the overall financing mechanism for Crossrail, to seek voluntary contributions from businesses totalling £150 million. At the Second Reading of the Crossrail Bill, I asked the Minister what would happen if that money did not come in. I did not get a very satisfactory answer. This is in addition to the £200 million which the City agreed to provide from its own resources. As noble Lords will realise, the readiness of any business to make a voluntary contribution of this kind would be substantially influenced by their expectation—if they had an expectation—that it would be tax deductible.
When we debated the amendment in Committee, the Minister confirmed that business rates supplements anticipated by this Bill would be treated as business expenses and, therefore, would be deductible. The position of additional voluntary financial contributions, which are, of course, also supplementary to the rates which businesses pay, was something which the noble Baroness quite reasonably wished to reflect on in consultation with Her Majesty’s Revenue and Customs. It was that which gave rise to the undertaking to write before Report.
I will now refer to the letter, which a number of noble Lords have also seen. It starts by making two perfectly reasonable points. First, it points out that the question of deductibility cannot be pronounced on as a generality because the position is complicated. Individual business circumstances will vary and any question of deductibility has to therefore be determined in relation to an individual business’s circumstance. Secondly, it points out—again quite properly—that, other than for capital expenditure, the test is whether the expenditure is incurred,
“wholly and exclusively for the purpose of the business”.
Having set out that background and specifically referred to the question of deductibility as being dependent on the circumstances and not amenable to a general assertion, the letter goes on to make a general assertion, albeit hedged:
“Therefore, whilst I am advised that it is impossible to give a definitive answer in general terms rather than on a case by case basis, it remains unlikely that a voluntary contribution would be tax deductible”.
I find that a surprising conclusion and I think we deserve a further explanation. It may be that HMRC—I was a Treasury Minister responsible for the Inland Revenue when it was a separate department—mindful of the precedent which might be claimed to have been set, has advised in generality and not by reference to Crossrail—in which case, perhaps one can understand that rather sweeping statement. But this amendment is aimed specifically at the very special Crossrail scheme, which was the subject of a government hybrid Bill which took a number of years to get through Parliament but eventually reached the statute book. There is a wide measure of agreement that the scheme is essential in order to improve and enhance the transport of people in and around London—not just on the line of the rail but over a much wider area. Of course, it is widely agreed by business in London because of the advantages that that extra mobility will bring to the conduct of business.
In ordinary circumstances, I can understand why businesses would not contemplate making voluntary contributions to a scheme of that sort. It is not in the nature of businesses to do that. They may make charitable contributions. They may decide to offer a bonus to their staff—out of the goodness of their heart, as it were. Charitable contributions will have certain tax consequences, and bonuses are certainly tax deductible, because they are clearly seen to be incurred for the benefit of the business. Businesses are already earmarked for a business rate supplement, which the London mayor will be entitled to levy under the Bill, and the proceeds of that will be going to Crossrail.
There is a Treasury paper on that, to which I drew the attention of the noble Baroness, Lady Andrews. She was not aware of it at the time, but no doubt she went back to ask, “Why haven’t I been shown this?”. It is a Treasury document on business rate supplement guidance, published last month. Paragraph 2.1 is interesting. It states:
“There are a number of funding mechanisms available that enable local authorities and their communities to raise revenue locally to invest in the local area, for example Business Improvement Districts”—
to which we will come later—
“and the Community Infrastructure Levy”.
It is now nine months since the Planning Bill reached the statute book. What has happened to the community infrastructure levy? It was contained in Part 11 of the Planning Act. We were supposed to have had regulations. Nothing has been heard of it since. I have been postponing meetings with local authorities because they tell me, “We know no more about it than you do”. Perhaps we might have an answer on that.
Business improvement district contributions are deductible. The community infrastructure levy, in so far as it is a revenue payment, as it may be in some circumstances, will be deductible. One therefore has to ask why a voluntary contribution of the sort being made to Crossrail is not also deductible. After all, in making such a voluntary contribution, business is at the same time making a robust statement about the importance of the project for its own business interests.
Therefore, I am quite unclear why, at least prima facie, voluntary contributions should not be regarded as wholly and exclusively for the purposes of the business. As the noble Baroness said, I understand that this is not straightforward, but we are entitled to a fuller explanation of why the Inland Revenue seems to take the view that,
“it remains unlikely that a voluntary contribution would be tax deductible”.
We ought to have that explanation before Third Reading. I well understand if the noble Lord is unable to give us that assurance today. I leave him with this thought. A BID payment is tax deductible, as I said a few minutes ago. A BID payment is, in a sense, a voluntary payment, because it must be voted on. There has to be a vote of all the businesses that will be liable, so it has very much the characteristic of a voluntary payment. Why, therefore, are voluntary payments made to a project of the enormous importance to London of Crossrail not, at least prime facie, tax deductible? I beg to move.
My Lords, like my noble friend, I was once a Treasury Minister. It is 22 years since I gave up being the Minister responsible to Parliament for Customs and Excise, long before the marriage of Customs and Excise with the Inland Revenue in their new and present form as HMRC. I mention this because, as my noble friend Lord Jenkin said, the guts of this matter is the attitude of HMRC as expressed in the letter to which my noble friend has alluded, which has come from the noble Baroness, Lady Andrews, arising out of Committee. I recognise that she was being guided by HMRC, and I share my noble friend’s regret that the Government’s position is as the letter he referred to implied. I appreciate that HMRC has to interpret the legislation that it is asked to enforce, and the legislation is our responsibility in Parliament.
In the circumstances of Crossrail, which underlay my noble friend’s contribution in Committee and today, I hope that sensitive interpretation, in terms of the case-by-case formula, will apply, and I will briefly enlarge on that hope. To go back to those days when Inland Revenue and Customs and Excise were separate, some identified the difference between them in their character as revenue departments. The difference was that Inland Revenue was preoccupied with the precise letter of the law, while Customs and Excise, in dealing with business, was capable of taking a broader view and of seeking to maximise revenue by simplifying procedures more roughly and readily on the time-honoured grounds that the best deal in business is one which is good for both sides.
I left my responsibilities for Customs and Excise two precise centuries after Pitt the Younger invented the Consolidated Fund and simultaneously slashed excise duties in a manner which dramatically raised the proceeds from the duties which remained, because of course smuggling disappeared overnight. Of course, I recognise that deductibility will involve a subsidy from HMRC, but common sense sends us back to Pitt. Crossrail, as my noble friend alluded, is going to need all the help it can get to make sure that it actually has the funds to carry out this enormous project. I have composed my notes for this speech around a draft of the speech which my noble friend has just delivered, so I have to pause for a moment while I recover my place.
If non-deductibility prevails, there is the risk that voluntary contributions will not come in. If, however, the response is sensitive, the chances improve that business will support the obvious arguments that exist for Crossrail and put their hands in their pockets disproportionately. There are good precedents for believing that bread being cast on the waters does produce a return after many days. I have no hesitation in supporting my noble friend’s amendment.
My Lords, I support the amendment in two particular regards, and I seek some clarification. The points that have been made have been perfectly presented by my noble friends Lord Jenkin of Roding and Lord Brooke of Sutton Mandeville, and I have two points to add. I draw on similar experiences under the previous Conservative Government, in which I had the joy of occupying the position of Paymaster General in looking after such matters, albeit temporarily in the final days of that Administration.
To a degree, I can buy the careful wording used in this letter on the point of not wanting to bind or have the issue of precedent before us. However, the final sentence of the fourth paragraph states:
“Therefore whilst I am advised that it is impossible to give a definitive answer in general terms rather than on a case by case basis, it remains unlikely that a voluntary contribution would be tax deductible”.
In many ways, that is the issue. I could understand if the sentence finished at “on a case by case basis”. One could accept that as a reasonable response from the Treasury. However, to add,
“it remains unlikely that a voluntary contribution would be tax deductible”
seems to bind the hands in a way it sought to avoid. Once the City of London comes to realise, particularly those businesses which have offered a total of £150 million, that this sum will not be tax deductible, the consequence will be that it acts as a huge disincentive for future schemes that may be offered elsewhere in the country and for those who may still be considering a voluntary contribution to Crossrail. The issue needs to be dealt with. We are familiar with this kind of test in standard wording such as “wholly and exclusively in pursuit of the interests of the business”. If the contribution was not wholly in the interests of the business, why on earth would it be made in the first place? It is bizarre to argue that a business might give 100 per cent for the sake of getting relief on 20 per cent. That is a non sequitur.
Of course such contributions are made wholly in pursuit of the interests of business; that is why organisations make such investments. It is also the reason why this letter, albeit that it has been guided by the hand of the Treasury, is entirely wrong to suggest that such matters should be judged on a case-by-case basis. In the case of contributions made to Crossrail, the answer should most certainly be that they are tax deductible because they are expenses incurred wholly in pursuit of the interests of the business.
My Lords, I congratulate the noble Lord, Lord Jenkin, on pursuing this matter with such doggedness. In response to the last point made by the noble Lord, Lord Bates, I would have thought that if a contribution is not in the interests of a business, it is likely to be ultra vires and the directors in the case of a company would be acting in breach of their fiduciary duties.
I have one question for the noble Lord, Lord Davies. Will it be possible or practicable—I am particularly concerned about “possible”—for the local authority to assess the impact on contributions when dealing with a variety of taxpayers? Within the drafting of the provision and the requirements of the prospectus, is it possible to assess the likely impact when the position may vary between different taxpayers?
My Lords, I congratulate the noble Lord, Lord Jenkin, on his persistence with regard to this important issue. I vouchsafe the opinion that had he received this letter a little earlier—the apologies are heartfelt; he will recognise that my noble friend had limited powers over its construction and therefore over it arriving when it did—I venture to consider that had he received it 24 or 48 hours in advance, it would not in any way, shape or form have caused him to deviate from his chosen course of tabling this amendment, because it is such an important issue.
That I understand, my Lords. The Government are going to have to address themselves to the issue irrespective of the timing of the letter. However, there is a sincere apology on that front which my noble friend wishes me to convey. It would have helped if the issues had been made clear earlier.
Crossrail is an important dimension of the Bill, but it is not the Crossrail Bill. We are constructing legislation for schemes in which local authorities will be in partnership with business for the economic development of areas, and Crossrail is a striking illustration of that. Noble Lords opposite have suggested that Crossrail in London should be the sole purport of the Bill, but it is not. Therefore it will not do to suggest that the Government’s response to the issues raised in the Bill should be constructed solely in terms of Crossrail. As a consequence, in defence of the HMRC, the response in the letter quite properly talks about a wider generality than the specifics of Crossrail.
I have listened very carefully to the case presented by the noble Lord, Lord Jenkin, which was ably supported by the noble Lord, Lord Brooke, who has a keen interest in this matter, and I recognise what the noble Lord, Lord Bates, offered in the way of support from the Front Bench. Of course the issue will be pursued and examined further. The letter is constructed against the generality; noble Lords have emphasised specifics. I cannot at this stage go any further than I have with regard to the letter, which makes it absolutely clear that I can offer no comfort in relation to the deductibility of voluntary contributions in a general sense but that the Inland Revenue will consider the issues on a case-by-case basis.
Noble Lords are saying that the case-by-case basis is particularly strong in relation to Crossrail and ought to commend itself to the Government. They have argued that point strongly today and I understand the strength of the argument. But they will respect that I am defending a Bill which concerns not only the issue of Crossrail but has a general import.
My Lords, the Minister will be the first to take the point that for a Bill which is intended to be of benefit to the nation as a whole, as was confirmed by the vote which we had earlier, the arguments for pursuing this particular method would be dramatically enhanced if Crossrail is a success, and will be damaged if it is not.
My Lords, that is certainly so. However, there is a wider public interest in the benefits contained in the Bill which may derive from Crossrail’s success because, as an economic project in itself, it is vital to the capital city. We all recognise the necessity for the success of Crossrail.
I shall take away from the debate the importance of the representations that have been made. The noble Lord, Lord Jenkin, has indicated that it is unlikely that we have heard the last of his representations in regard to this issue. But he will accept that today I am briefed in relation to the general consideration of the Bill and that that is why I am in no position to do anything more than identify the key elements which HMRC has put forward in its letter about how it will consider these issues. It might be that progress can be made regarding Crossrail, but I emphasise that the Bill is designed to cover wider issues. Therefore, it is bound to express itself in generalities that are bound to be reflected in the kind of response that HMRC puts forward. When it talks of a case-by-case basis, that is how the matters are likely to be advanced. The Bill, however, is bound to come into the category of generalities and the issue of it being case by case must be fought on those individual aspects. There may be a framework in which that can be achieved, but the Bill does not provide that opportunity.
I venture that noble Lords will also appreciate that, on a matter of such importance regarding taxation, there are real issues with how the other place will take the perspective that this noble House might adopt. The noble Lords who spoke in this debate are so experienced on these matters that I do not need to develop that point, but the debate has been constructive and interesting. It is clear that these issues need to be thought about deeply, and that the Revenue was obliged to respond in the context of its general position. Those generalities are bound to obtain with legislation where neither I nor my noble friend Lady Andrews—nor anybody else—can translate the Bill into one specific case in those terms. I hope that noble Lords will appreciate the limitations I have in responding constructively.
My Lords, on the generalities, my point about contribution was that it was certainly not general. The final sentence of paragraph 4 of the letter dated June 5 says,
“it remains unlikely that a voluntary contribution would be tax deductible”.
That is very specific, not general.
My Lords, it is general in the sense that it applies to all the issues that the Bill raises. The noble Lords, Lord Jenkin and Lord Brooke, were saying—and I think that the Front Bench supported them—that there was a special position regarding Crossrail. It may well be that it is in the interests of the Government, of the nation and, certainly, of London, that the Crossrail project should be advanced by this special consideration. However, when defending legislation that is, by definition, wider than Crossrail and seeks to cover a range of possibilities, it is unreasonable for me to be asked to do more than indicate that this is the general position that we are bound to defend at this point. I regret that I can go no further this evening.
My Lords, I am extremely grateful for the support that I have had for this amendment from all parts of the House, except of course from the Government Front Bench. I start, at once, by being most grateful for the apology that the noble Lord, Lord Davies of Oldham, gave; I realise that Ministers may, in the past few days, have had other things on their minds than following up points from Committee.
However, the issue remains: the word “unlikely” has caused a good deal of unhappiness in the House. It is good that the Minister has said that the issue will be pursued and examined further. I wonder whether, in the course of that examination, he or whoever it would be might receive a deputation from the City of London—accompanied, perhaps, by some companies that have been asked to make and have considered making voluntary contributions to Crossrail—so that this could be discussed not only with Ministers in the DCLG but, perhaps, with officials from the Revenue. That would be a helpful way forward, and it might help the Minister to achieve the objective that I think he is anxious to achieve, without prejudicing the generality of the fiscal treatment of companies in these circumstances. I am happy to give way if the Minister says that he would be prepared to do that.
My Lords, as ever, the noble Lord puts these issues in persuasive terms. He will appreciate that, given the particular position that I occupy today in coming late to the Bill, I am reluctant to engage in a response that puts obligations on others rather than on myself. I recognise the strengths of the points that have been made today, though, and there is no doubt that further discussions would be valuable. I will do what I can to facilitate those.
My Lords, I realise the constraints that the Minister feels himself under, and no doubt if I were in his boots I would have said much the same. I have some sympathy for him, being confronted immediately by three former Treasury Ministers arguing this point. He has been good enough to say that this matter will be pursued, and I am sure that if a request is made, a delegation will be received and these good things can be discussed with those who are directly concerned. Given that, I beg leave to withdraw the amendment.
Amendment 16 withdrawn.
16A: Schedule 1, page 21, line 27, at end insert—
“( ) A description of the arrangements for—
(a) the proposed project management,(b) the governance and management arrangements (if any dedicated arrangements) for the project when completed,(c) the mechanisms by which those paying BRS shall be kept informed of what monies have been raised in pursuance of the BRS and how they have been expended, and(d) those paying BRS to 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.”
Amendments 17 and 18 not moved.
Amendment 19 withdrawn.
Amendments 20 and 21
20: Schedule 1, page 22, line 35, leave out from “to” to end of line 37 and insert “the requirement under section 7 to hold a ballot”
21: Schedule 1, page 22, line 38, leave out from “to” to end of line 41 and insert “the result of the ballot held under section 7”
Amendments 20 and 21 agreed.
Clause 6 : Consultation
22: Clause 6, page 4, leave out lines 24 to 26 and insert “consult those persons who the authority thinks might become liable to pay a chargeable amount before the end of the chargeable period of the BRS and whom it would be appropriate to consult”
My Lords, I shall also speak to Amendments 23 and 24. Amendment 22 revisits Clause 6(5), because I believe consultation is important and Clause 6(5) does not in my reading actually require it. It says that,
“a levying authority must ... think whether it would be appropriate to consult persons who the authority thinks might become liable”;
in other words, it must think whether consultation would be appropriate. At Grand Committee, the debate turned on the difficulty of identifying those who may be above or below the threshold—in other words, who might become liable—which was not the point of the amendment. Thinking whether it is appropriate to consult is not the same as thinking who might become liable. Our amendment—this is the crucial point—applies the term “appropriate” to ratepayers, whom it would be appropriate to consult, not to consultation. The consultation itself would be required. I hope that that explanation is clearer than we managed to achieve at the last stage.
Amendment 23 would require the levying authority to publish the result of the consultation, once it had been conducted. Oddly, this is where even the best local authorities slip up too often. My noble friend Lord Tope, who has had to go back to Sutton, as he says, to be a councillor, has volunteered that this is too often a problem. The best consultation can be carried out to really high standards, but the authority forgets to feed back the outcome of that consultation—the results of it.
Amendment 24 would flesh out Clause 6(6). The Minister may tell me that this is a detail too far but I think that it is important that when a revised version of the prospectus is published, the revisions are clearly indicated. I am thinking here of the mechanisms so readily available to us in computer programs that indicate the alterations which have been made. It will not be helpful with a complicated document to issue a revision without pointing ratepayers to where those revisions have been made. I beg to move.
My Lords, I support this group of amendments as they seem to make an awful lot of sense. We had a very good debate on this issue in Committee. Clause 6 currently provides that the authority has only to think whether it might be appropriate to consult. That seems an odd thing to include in a Bill. The consequence is essentially that the levying authority must consult those whom it thinks might be liable for the BRS before the end of the chargeable period of the business rate supplement., This amendment is almost consequential on our acceptance of Amendment 1, as there will be a mandatory ballot and they will be consulted at some stage. However, that is a wider consultation than the one being aimed at here.
Amendment 23 is consequential on that. It states:
“The levying authority shall publish the result of the consultation”.
An additional point here is the timely publication of the results of consultations with busy business people. In Committee we discussed whether there were more immediate, real-time ways of engaging in consultation so that members of the business community could track what people said. We also discussed such exciting activities as blogging which could be used to give the business community a more immediate sense of what other members of the business community were thinking about an issue, rather than having an extensive written consultation and then finding that businesses do not have the time to read or digest results stretching to several hundred pages.
Amendment 24 currently provides that the levying authority has only to publish a revised version of the initial prospectus if changes are made after the consultation and it believes that it would be necessary and appropriate to do so. We therefore strongly support this amendment which provides that the authorities must publish a revised version of the initial prospectus. It is almost unthinkable that there could be circumstances in which consultation took place on complex schemes aimed at economic regeneration and feedback was received but then not one change at all was made to the prospectus. Therefore there ought to be an updated prospectus. The concept of a Green Paper moving to a White Paper is sound and ought to apply to the way in which these prospectuses are issued. The prospectus should perhaps be issued in draft Green Paper form and then in a final document to be published when the results have been collated and sorted. Our view is that the amendments would be nice to have in ordinary circumstances, but, given the decision of the House on Amendment 1, they are now essential. I very much support the amendments.
My Lords, I am grateful to both noble Lords for their constructive approach to these issues. Of course local businesses should have confidence that they will be consulted if they are likely to have to pay the supplement. That is why Clause 6 requires levying authorities to consider whether they should consult those persons that they think will become liable for the BRS in future.
The discretion allowed for in Clause 6 is not a get-out-of-jail-free card when it comes to consulting those who might become liable for the supplement. The levying authority will have to be able to justify any decision it takes not to consult those who might become liable for the supplement. For example, where properties with a rateable value of £50,000 are liable, it would be very difficult for the authority not to consult ratepayers whose properties had a rateable value of £49,999.
The Bill as drafted gives flexibility for dealing with marginal situations—for example, determining whether it is necessary to consult those with a rateable value of £30,000 in an area where the BRS might be relatively short-term, and therefore it would be highly unlikely that such businesses would move into the category in such a short time. It enables the levying authority to take a reasonable and proportionate approach to consulting those who might become liable for the supplement. However, the amendment, by requiring authorities to consult those who might become liable for the supplement in future, runs the risk that they will have to consult absolutely anyone who has the remotest possibility of becoming liable for the supplement, lest they open themselves to a potential legal challenge. I am sure that that is not the intent of the amendment, but that is what the local authority is likely to feel obliged to do if the amendment is carried and we do not have the flexibility that we envisage in the Bill as it is presented.
Amendment 23 requires levying authorities to publish the results of consultation on their initial prospectuses. Amendment 24 would require levying authorities to publish a revised initial prospectus following the consultation but before the publication of the final prospectus. Of course any consultation process on the BRS needs to be transparent, and businesses need to have confidence that their concerns and comments will be taken seriously and will be reflected in the final plans for the project. For these reasons, levying authorities will be required to publish a final prospectus. This will set out how the BRS will work and the details of the project, taking account of the comments and views expressed during the consultation. In line with best practice, the authority should also consider publishing a summary of the consultation responses, setting out how the project has changed as a result.
I emphasise best practice. We are certainly prepared to emphasise in guidance what we expect to see in best practice and levying authorities should follow that. However, to require a revised initial prospectus in all cases surely goes further than what will be needed in many cases, resulting in unnecessary delay and excessive bureaucracy. Instead of taking a standardised approach, which in many cases may not be appropriate, we should give levying authorities the flexibility to decide what is right for their area and for their proposal. That is the basis of the Bill as it stands.
I am grateful to the noble Baroness for having identified issues that need serious consideration. I know that they reflect discussions held in Committee. I merely wish to emphasise that we considered these matters in drafting the Bill. We are seeking to avoid being overly prescriptive where we do not need to be, but we certainly agree—as has been emphasised this evening—that best practice on consultation needs to be followed. We are happy to signal in guidance that levying authorities should indeed refer to existing best practice. I hope that on that basis the noble Baroness will feel sufficiently reassured to withdraw the amendment.
My Lords, I am not sure whether the Minister answered Amendment 23. Perhaps it was wrapped up with Amendment 22. As regards Amendment 24, publication is really very easy. The prospectus will have to be revised if there are changes. That follows; otherwise people will not know what they are talking about. Publication is really not difficult. I am so tempted to divide the House but I shall not do so despite a noble Lord saying “Go on”.
My Amendment 22 preserves flexibility as regards the consultees. It requires consultation but retains the term “appropriate” as applied to the consultees. The clause does not say what Ministers say that it says. I completely disagree with the Minister on that. However, I shall probably do better to rely on guidance than by polarising the position and having Ministers decide not to explain in guidance that the clause means something slightly different. On that basis I surrender and beg leave to withdraw the amendment.
Amendment 22 withdrawn.
Amendments 23 and 24 not moved.
Clause 7 : Holding of ballot
25: Clause 7, page 4, line 35, leave out from “BRS” to end of line 3 on page 5
Amendment 25 agreed.
Clause 8 : Approval by ballot
26: Clause 8, page 5, line 14, leave out from beginning to second “the”
Amendment 26 agreed.
Clause 10 : Variations
Amendments 27 and 28
27: Clause 10, page 6, line 18, leave out from beginning to second “a” in line 19
28: Clause 10, page 7, line 5, leave out from “BRS” to end of line 18
Amendments 27 and 28 agreed.
Clause 14 : Chargeable amount: supplementary
Amendment 29 not moved.
Clause 15 : BRS relief
30: 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”
This brief speech on my part might require a rather longer answer. On reading Hansard, I realised that I am very unclear—I may be alone in that—about the position regarding empty properties. I agreed with the noble Baroness, Lady Andrews, that I would table this amendment in order to give the Government an opportunity to explain what the position is. I beg to move.
My Lords, I support the amendment. It concerns reliefs, which can apply widely. They can apply to sports clubs and other such organisations. However, the noble Baroness is seeking clarification regarding empty property rates. This issue is a sore point for business. The concept of empty property rates was introduced when businesses and the economy were doing well but has been implemented when businesses are doing badly. The idea was originally conceived to dissuade property owners from sitting on properties that should be redeveloped. Now many businesses and landlords are certainly not sitting on properties waiting to be redeveloped as their tenants are going out of business at an alarming rate. As a result, business premises are empty when their owners would wish for anything other than that, and they still have to pay this iniquitous tax of empty property rates. We will listen carefully to the Minister’s response on how he will deal with reliefs.
My Lords, I am grateful to noble Lords for keeping their contributions brief because my response is somewhat lengthy, given the complexity of the issue and the importance of getting on the record exactly how the provisions on reliefs are intended to operate. I hope that the House will be tolerant of me. There are different strands to this issue and I will deal with them under three main headings. First, there is how Clause 13 is intended to work. Secondly, there is the intention behind Clause 15, entitled “BRS relief”. Thirdly, I will deal with the issue of empty properties, which both noble Lords raised and the noble Lord, Lord Bates, emphasised.
Clause 13 sets out the method for calculating the BRS liability for a ratepayer. The method varies depending on whether the ratepayer already receives one of the existing mandatory or discretionary reliefs from national non-domestic rates. In framing our proposals for BRS, we want to apply the same approach as currently operates in the non-domestic rating system. The effect of Clause 13 is that if a ratepayer receives relief on their rates bill, the same level of relief will be applied when assessing liability for BRS. I emphasise how Clause 13 works. For instance, charities that receive just the 80 per cent mandatory relief will therefore have an 80 per cent reduction in their BRS liability. Where a charity receives 80 per cent mandatory relief and a further 20 per cent top-up relief on its rates bill, it will be entitled to the full 100 per cent relief and will pay nothing.
I realise that Clause 15 on BRS relief may have given rise to some confusion and I will attempt to explain how this clause differs from Clause 13. Clause 13 deals with reliefs under the existing non-domestic rating system. By contrast, Clause 15 covers reliefs specific to BRS. It enables levying authorities to reduce the impact of BRS, not by reference to any reliefs payable under the non-domestic rates system, but by setting out its rules for levying BRS. We make clear that those properties with a rateable value below £50,000 will not be liable for BRS. Clause 15 enables levying authorities to set the threshold for liability above £50,000—say at £65,000—so that properties with a rateable value below this would not be liable for BRS. It would be up to the discretion of the levying authority. Alternatively, levying authorities may wish to use Clause 15 to set a differential rate for properties with different rateable values. An example would be a levy of 0.5p for properties with a rateable value of between £50,001 and £70,000, a 1p levy for properties with a rateable value of between £70,001 and £85,000, and a 2p levy for properties with rateable values above that. That is the import of Clause 15.
Finally, I turn to empty properties. The starting point is how the non-domestic rate system works in relation to empty properties. Owners of empty properties are liable for 100 per cent of business rates liability unless they are specifically exempted. The exemptions are set out in regulations made by the Secretary of State. These include, for example, listed buildings. In such cases, those ratepayers have no liability for non-domestic rates. Levying authorities can choose whether their BRS should apply to empty properties. If they choose to do so, the same rules apply to the application of BRS liability as to non-domestic rate liability. That means that empty properties that are exempt from liability for NDR will also not be liable for BRS.
However, for empty properties liable to 100 per cent NDR, those of more than £50,000 rateable value will have 100 per cent liability for BRS. So, if a levying authority levies the maximum 2p BRS for occupied as well as empty properties, those empty properties with a rateable value of more than £50,000 will be subject to the same 2p levy. If a levying authority chooses to include empty properties in their BRS, any reliefs it may wish to apply—that is, the reliefs under Clause 15 —must apply equally to occupied and empty properties. For example, if a levying authority wishes to increase the threshold for BRS liability to £60,000, this would apply to occupied and empty properties. The levying authority could not apply different rules to empty properties. It could not, for example, set a threshold of £55,000 rateable value for occupied properties and set a different threshold of, for example, £60,000 for empty properties. That is not permissible.
It would be worth spending a brief moment to explain the role of Clause 13(6). This prescribes the formula for calculating the daily chargeable amount for empty properties. But this subsection applies only where the Secretary of State or, in Wales, the Welsh Ministers, have made an order under Section 45(4A) of the Local Government Finance Act 1988, which reduces the liability to national non-domestic rates of the owners of empty properties to less than 100 per cent of the basic liability. If such an order had been made under that Act, reducing NDR liability for empty properties to, say, 50 per cent, I assure the House that liability for BRS would mirror this. Liability for BRS would also be at 50 per cent. However, no such order under the 1988 Act has ever been made, so the subsection has no effect at this stage.
I am sure that the noble Baroness, Lady Hamwee, was all too well aware of that issue, but I put that on the record for those who know a little less about these issues than she does. I realise that I have gone much wider than the focus of the specific amendment, but the noble Baroness invited me to clarify the issue. I hope that that helps the House.
My Lords, that was admirable. I hope that the noble Lord did not have to spend more than about five hours on that over the weekend. Seriously, that was extremely helpful. I am sure that I will understand it even better when I have read it, but after that final point about the order under the 1988 Act, as amended, not having been made, suddenly everything slots into place. I beg leave to withdraw the amendment.
Amendment 30 withdrawn.
Clause 16 : Interaction with BID levy
31: 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).”
My Lords, the amendment stands in my name and that of my noble friend Lord Cathcart. The amendments in this group have been retabled for the good reason that we were not satisfied with the answer that we received in Committee. Therefore, we sought to revisit the amendments on Report.
First, I shall briefly run through what we propose. Amendment 31 means that where a person is liable for a business improvement district, or BID, levy, and is subject to a business rate supplement imposed by that authority, the chargeable amount payable in reference to the business rate supplement will be offset, as stated in subsection (2). Amendment 32 follows on from that and would leave out,
“to the extent specified in the rules”.
Amendment 33 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 on what to do when a person is liable for the business improvement district levy and is also subject to the business rate supplement. Our amendments remove the levying authority’s right to make rules about it and instead specify that the liability for business improvement districts will be offset against the amount that the person would pay for business rate supplement.
Amendment 35 would mean that this section does not apply to Crossrail for the reasons which we touched on earlier. The first tranche of amendments deals with offsetting the bid levy. This was debated in another place in Committee on 27 January at cols. 181 to 186 of Hansard. We do not want to risk harming business improvement district schemes, which by and large seem to be working well around the country. We have received a number of representations from business improvement districts, including the West End Company and many others, where they seem to be doing excellent work. We want to support that initiative.
We are none the less cognisant of the huge pressure being put on businesses at the moment. This is an issue to which we return time and time again. It is a question of good legislation being a matter of timing. There could not be a worse time for levying further charges on business, particularly where a business has willingly and voluntarily engaged in a business improvement district and then finds that, in addition to the contributions it is making at that level, which in reference to Amendment 16 may or may not be tax deductible, it could potentially be faced with a business rate supplement of up to 2p in the pound. That is on top of the business rates which are already levied, currently at a rate of about 48p in the pound. These are substantial sums of money and effectively take business rates to 50p in the pound on rateable value, which is a significant sum.
Although I do not want to run foul of tolerance in terms of procedure, I refer to the previous debate as an example. Take an empty property which has a rateable value in excess of £50,000—a property which has been declared empty because the business has gone bankrupt. If the property has to potentially stump up £25,000 a year, notwithstanding that the owner is not getting any rent, that seems to be unsympathetic and unhelpful to business, in contrast to what the Government tell us that they are trying to do.
In many ways, the concern that levying authorities will raise the business rate supplement by a low enough threshold so that the ballot will not be triggered has been eased, providing that, when the amendment and the Bill make their way back down the corridor, those important amendments and the express will of this House are honoured in another place.
Because businesses are under so much pressure at the moment and are not able to vote against business rate supplements, they will be forced to vote against business improvement districts. This is in addition to—this was a fair point raised by my noble friend Lord Jenkin of Roding—the community improvement levy, which has not been exercised and which they do not have a vote for.
The best way to prevent this situation is to allow an automatic offset of bid levies. This is necessary reassurance to business so that they will not be hit by a double or potentially even a triple whammy at a very difficult time. Our Amendment 35 makes sure that Crossrail is exempt. For the reasons we have given, we have always taken the view that Crossrail is an exceptional case. We have acknowledged that; we are supportive of it and our argument throughout has been that we should not turn something exceptional into something normative.
On business improvement districts, the Bill allows a levying authority to decide whether to offset the payment of BID levies against the business rate supplement liability, provided that the approach is consistent with all BIDs in the area. In London, the mayor does not intend to exempt BIDs from paying Crossrail a business rate supplement for the reasons that I shall set out. I want to spend a moment dealing with this because, for those observing the amendments, there may appear to be a slight inconsistency here. In the case of Crossrail, we are supporting the fact that there is no offset because, if there were, a strong incentive would be created to establish business improvement districts for the sole purpose of avoiding the business rate supplement, and we would be concerned about that.
Business improvement districts contribute towards local improvements such as street cleaning, security and public area improvements. They are unrelated items of expenditure and, in our opinion, it would be a mistake to offset funding for one against the other. Another reason is that many voluntary associations which are not formally set up as business improvement districts will have to pay the Crossrail business rate supplement. Without the revenue from businesses in business improvement districts, Crossrail would have a funding shortfall, particularly as large parts of the West End, including Oxford Street and Regent Street, which are likely to be among the biggest beneficiaries of Crossrail, would not be required to pay the Crossrail business rate supplement. I make that point simply in the hope of heading off any charge that the amendments do not quite square up to our position.
For those reasons, the mayor opposes offsetting the payment of business improvement district levies against the Crossrail business rate supplement liability. However, he will work with the boroughs and the business community to ensure that the impact of the Crossrail business rate supplement is minimised.
Business improvement districts, the British Property Federation, London First and other organisations have long argued that BIDs should have the power to decide whether to include property owners in business improvement districts, subject to this being approved by a ballot. They are currently exempt from paying any BID levy, although many property owners have contributed voluntarily to BIDs. However, some of the uncertainty now surrounding the tax status has been a cause for concern.
Why are we debating this again after we covered the matter in some detail in Committee? We are grateful that the Minister has tabled government amendments, which we will reach in the next or a later group, that will allow the burden to be shared between property owners and occupiers. That should go some way towards helping to alleviate the weight of taxation on businesses, which this Bill will increase. However, we are still concerned. In Committee, the Minister could tell us only that an automatic offset would impose rules on local authorities rather than devolve responsibility to them. She quoted the example of the South Bank Employers Group, which 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 seems to us that the Government must admit that our amendments achieve just what the Minister was seeking to achieve and which she articulated in Committee. She also said that the chief executive of British BIDs, Dr Julie Grail, had said that,
“a full offset in London would be a ridiculous and dangerous move”.—[Official Report, 18/5/09; col. GC 553.]
Again, our amendments show that we are very much listening to what the business community and business improvement districts want. The Minister then argued that the crucial point is that the levying authorities can use their discretion on whether or not to have an offset. We would argue on the side of businesses, the crucial point being that they should not be hit by two levels of taxation. The Minister knows that we disagree with the Bill on a point of principle, but our amendments at least try to make sure that businesses are protected in some way. I beg to move.
My Lords, I wrote a note to myself to refer to the Mayor of London’s briefing. I will not read it out because the noble Lord, Lord Bates, has done it full justice. We are, however, opposed to an automatic offset. BIDs are different from BRSs—they have a different purpose and there are different ratepayers—so we do not think it would be appropriate for there to be an offset in the automatic way he suggests. I am afraid, therefore, that we cannot support this amendment.
My Lords, at this stage in the evening, one takes solace where one can, and I take a great deal of solace from the noble Baroness, Lady Hamwee, who, in very succinct terms, has indicated why she cannot support the amendments, and, of course, neither can I. I will deal with Amendment 35 separately.
The interaction between business improvement districts and BRSs has generated a fair degree of debate and passion, both in this House and in the other place. I do not for one moment underestimate the concerns that have been raised on this issue and I understand the force with which the noble Lord presented his amendments and the articulate way in which he sought to advance them. However, we do not think that having an automatic offset is the right way forward. It is worth taking a step back and thinking about what we are trying to deliver here.
This Bill provides a real opportunity for local authorities to work together with businesses to develop proposals that will enhance the economic development of local areas. This is not about diktats from Whitehall; it is about devolving responsibility to the local level. It will be for the local authorities, working in partnership with businesses in their area, to put forward proposals in their prospectus. Provided local authorities can make the link to economic development, we want them to use this new power flexibly to meet the specific needs of their area. We have set an overall limit of 2p but we are giving authorities the flexibility to decide whether the levy should be set at 0.5p, 1p, or 2p. They can decide whether to offer more generous safeguards to businesses. They can, if they wish, choose to set the threshold for liability above £50,000—for instance, at £65,000. They can decide to exclude or include empty properties in their BRS proposals.
All this represents the fact that flexibility is at the heart of the Bill. It would be totally inconsistent to impose a requirement on levying authorities to have an automatic offset for those paying BID levies. It would be equally illogical for the automatic offset to apply in every case except for the Crossrail project. I heard what the noble Lord had to say about his Amendment 35, but the Bill is clear that it should be left to the Mayor to decide whether to have an offset. Surely that is the simplest and most consistent way of going about it. I understand the arguments for an automatic offset, but the noble Lord will recognise from the debates I have outlined here and elsewhere that he does not command a universal view. We have heard from those in the BID sector itself who do not favour this approach. It would be unwise and irresponsible to ignore those views. The Bill is right to say that levying authorities can choose to do it, if appropriate. It is for the local authorities to make their decisions.
The noble Lord valiantly pressed an issue which, I recognise, has a degree of support, although he suggested that, with Crossrail and the mayor, there is not that support. The other side of the case is at least as strong and our concern in the Bill is to maintain for local authorities—they will have to take the initiative, nothing is imposed on them; if they do not take initiatives, none of these projects go forward—the maximum flexibility for them to make the choice. That must be the right strategy, and I hope that the noble Lord is at least persuaded enough to withdraw his amendment.
Amendment 31 withdrawn.
Amendments 32 and 33 not moved.
House adjourned at 10.01 pm.