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Community Right to Challenge (Business Improvement Districts) Regulations 2015

Volume 759: debated on Tuesday 24 February 2015

Motion to Consider

Moved by

That the Grand Committee do consider the Community Right to Challenge (Business Improvement Districts) Regulations 2015.

Relevant document: 20th Report from the Joint Committee on Statutory Instruments

My Lords, the Committee will know that town centres in England face significant challenges to survive and prosper in the internet age. In order to thrive, there is often a need to innovate and renew. The Government have recognised the importance of local high streets and sought to provide support through a range of programmes, including for example funding for the Portas pilots and town teams. We have established the Future High Streets Forum to advise government and develop practical policies, and we have supported retail markets through the Love Your Local Market campaigns, which have been incredibly successful in promoting local businesses. I visited one in Kingston-upon-Thames, which showed some incredible innovation by local entrepreneurs.

We have supported the establishment of business improvement districts, with a loan fund to help start up costs; we have introduced business rate support, including doubling small business rate relief, capping the inflation increase to 2% and a targeted discount for smaller shops, pubs and restaurants; and we have lifted planning restrictions to increase flexibility on high streets. In total this amounts to more than £1.4 billion of government support. All this is having an effect. Britain’s vacancy rate was 13.3% in November, its lowest level since June 2010 according to the Local Data Company figures of 8 December 2014. In February 2014, more than half of small business employers said that their profits had increased in the last 12 months, up by 13% on June 2013.

Business improvement districts are an important part of the efforts to revitalise town centres and the Government are committed to making sure that they can maximise their impact. That is why the Government conducted a review of business improvement districts to look at options to further strengthen the role of BIDs to ensure that they are able to play a key role in shaping and revitalising their town centres. The review was undertaken during the spring and summer of 2014 and involved meetings with British BIDs and Associations of Town and City Management, as well as round tables involving more than 20 individual business improvement district bodies. The department also met with the Local Government Association and visited a range of business improvement district bodies and local authorities.

The review demonstrated the additional value that a business improvement district can bring to a town centre. However, it also highlighted how the current model and legislation can restrict business improvement districts from being actively involved in important decisions that affect them. One identified option was to give business improvement districts the opportunity to run local authority services by adding them to the list of relevant bodies that can challenge to run local authority services under the community right to challenge. As we all recognise, local government services can play a vital role in making town centres clean, attractive environments, running local markets and supporting a thriving business environment. In many cases, local working between BIDs and local government is helping to regenerate high streets that might otherwise succumb to the pressures of out-of-town retail and online shopping.

In some instances, though, BIDs, as with the voluntary sector, have become frustrated by their inability to get their ideas for improvements listened to. In some cases, the BID may be a more appropriate body to deliver a service in their area; in others, they may simply want stronger levers to influence how services that are meant to benefit the retail area are delivered. The community right to challenge was introduced by this Government to allow the voluntary sector, social enterprises and parish councils the ability to make local authorities give full consideration to their proposals to deliver a service where they believe that they can do so better or differently. The right to challenge is not designed to be the first port of call for an organisation, nor does it provide an automatic right to take on a local authority service. However, it provides relevant bodies with the opportunity to have their ideas heard and to bid to run services. It is already allowing bodies such as charities and parish councils to put forward their proposals, and where they have done so it has been because they are convinced that the existing service could be improved.

The community right to challenge applies to local services, not to functions. It does not remove the accountability for a service from the democratically elected local authority, and it does not allow BIDs or private businesses to dictate commissioning decisions to a local authority. This change will add the following types of BID to the list of bodies able to use the community right to challenge: BIDs established under Section 41(1) of the Local Government Act 2003; joint BID arrangements—in other words, BIDs that operate across the boundaries of more than one local authority; property-owner BIDs; and joint BRS-BID arrangements—in other words, property-owner BIDs operating over more than one local authority area.

These changes will allow BIDs which have good proposals for delivering local services more effectively but are having trouble getting them taken seriously to use this power to make the local authority consider them, giving BIDs a further string to their bow when trying to improve conditions for business and growth in the local area. This devolves greater power and say to local bodies and helps continue to revitalise the great British high street that we all love and utilise. I commend these regulations to the Committee. I beg to move.

My Lords, the Minister has spoken glowingly about the progress the Government have made on the high street, but I put to him a recent report from PWC and the Local Data Company which, while recognising that the pace of retailers shutting shops reduced over the first half of 2014, shows that the gulf between openings and closures has nearly doubled. That survey covered the three months from July 2014 to 30 September 2014, and analysis shows that the net decline for the year to date has risen to 964 closures. That is quite a staggering number and belies, in effect, the fundamental point the Minister has made. Will he respond to that?

I have a specific question about what he referred to as the targeted discount for retailers—the £1,000, going up to £1,500—and the impact of EU state-aid provisions. As I understand it, it is subject to state-aid consequences. Is the discount per hereditament as long as the rateable value is not more than £50,000? Is the state aid de minimis similarly per hereditament or per business? I wonder how those two things are dealt with. In relation to the £1,000, if it is per hereditament, does that mean that the likes of Starbucks, with its renowned corporate social responsibility approach, would be eligible for the discount on each of its relevant outlets?

My Lords, this regulation adds an additional type of body, the business improvement district, as a body able to deliver services locally. It can make an expression of interest in delivering a service under the community right to challenge provisions of the Localism Act. It enables certain bodies to provide services. In principle, that is fine, but it would be useful if the Minister could answer a number of points raised by my noble friend Lord McKenzie of Luton. Could he also say a little more about the community right to challenge in itself, and what has been the benefit of the proposals so far? I have not heard a huge amount about them since they were put on the statute book. As for business improvement districts, and their work to improve town centres, have those in his department thought a bit more about the sort of service that they would see these districts actually deliver? Does he see any risk of fragmentation of services, for example by focusing on a particular high street or area, and perhaps even additional costs to business or residents?

I do not know whether the Minister was in the House yesterday, but his noble friend Lord Naseby asked a very pertinent Question about the crisis on our high streets. When she answered the Question, the noble Baroness, Lady Williams of Trafford, placed a lot of emphasis on “click and collect”. I notice that the Minister did not mention that once in his presentation here today, and I must say that I am a bit sceptical that click and collect is going to be the solution to the problems on our high streets. You have only to walk or drive around in London or elsewhere to see that there is a real problem in our high streets now. The noble Lord, Lord Forsyth, also made a very interesting point about how much tax is paid by booming internet-based companies, which again causes problems for shops that are trying to compete.

Could the Minister also talk about the whole question of infrastructure and transport, while he has his noble friend Lady Kramer here? For high streets and shops to work, good transport links are needed. That is an important point as well. If he could deal with that today, it would be helpful. If he cannot, perhaps he could write to me on that point. I am not against these orders, but they go much wider than some of the points raised yesterday in your Lordships’ House.

My Lords, I thank both noble Lords for their questions. As I said in an earlier debate, when we look at our local markets and high streets, it is important that we focus on these areas in a localised way. It is important to put on record that a business improvement district is a defined area in which a levy is charged on all business rate payers in addition to the business rate bill. The levy is used to develop projects from which those businesses in the local area will benefit.

The noble Lord, Lord McKenzie, raised the PWC report. In my opening statement, I cited the improvements that we have seen in the high streets. We are giving local communities power to save shops through the community right to bid, and neighbourhood plans are also allowing local businesses to set out changes to local planning. I take on board the concerns that he raised about local high streets and the concerns about closures that have happened in certain areas. It is important that local authorities also take greater responsibility.

I remember from my own experience in a local authority when I was the cabinet member responsible that we ensured, for example, a simple solution on parking, which is now used extensively across London and other areas—20 minutes’ free parking to bolster the local shop network. That perhaps also alludes to a point that the noble Lord, Lord Kennedy, raised about transport and supporting transport infrastructure. We need to ease the burden on shops and local businesses by helping them to facilitate foot flow and shopper flow into them. In many areas, local authorities do a very good job in ensuring that they can ease parking restrictions, for example.

The noble Lord, Lord McKenzie, always asks very technical questions when I am in Committee or on the Floor of the House. I am minded of the fact that he researches these issues quite thoroughly. On the impact of state aid and the two questions that he asked, I seek his indulgence and will write to him specifically on those issues.

The noble Lord, Lord Kennedy, referred to the risk of fragmentation of services. I do not share that concern about BIDs because we are seeking to widen the scope of organisations that can deliver services more effectively. As I said in my opening remarks, when local authorities are looking to procure services, accountability remains with them. They are the democratically elected bodies that electors will hold to account. The idea is not to break up or fragment services but to widen their scope and to identify the bodies that can deliver services most effectively. Certainly there has been a demand to see how local businesses working in an area can take greater responsibility for local services.

The noble Lord, Lord Kennedy, asked about the type of services that can be delivered by a BID. We expect BIDs to challenge to run services such as cleaning services or environmental measures. There is no limit on what projects and services can be provided through a business improvement district. It will be down to the local authority to judge whether the bid put in by the BID, among other players, can deliver the most efficient and cost-effective service locally.

On the question of how many organisations have successfully used the right to challenge, the information gathering we have done to date indicates that there have been about 50 instances of community groups using the right to challenge. A survey we carried out in July 2014 of voluntary and community sector groups that had used our advice service found that 43 organisations out of the 105 respondents intended to put in an expression of interest in the months ahead. Of the expressions of interest that we are currently aware of, seven have triggered procurement exercises or have led to work being awarded through service-level agreements.

My Lords, it has struck me that we have not mentioned anything about the planning process. I am a councillor in Lewisham and the Brockley Road, which is in the area I represent, is a wonderful high street. It is vibrant and has many different types of shops there—there is a Co-op, a Budgens and other smaller shops—and the variety works. Lordship Lane, which is near to where I live, also has a great deal of variety.

However, there are other places which have problems and where there are not-so-good shops that are all very similar. This legislation may be part of the solution, but is there not an issue about the powers that authorities have in being able to use the planning process to ensure that they get a better variety of shops to serve their communities? You can find very good and very poor high streets close to each other, and the variety of shops, the kind of people who use them and the transport links can vary locally as well.

On some of the specific issues and more generally, the Government have sought to again look at the planning process to see how that may be improved. The concept of the changes we have seen—for example, in neighbourhood planning—allows local business areas and local people to set out what their planning priorities are. The move has been towards ensuring greater responsibility at a local level. However, we all share the noble Lord’s concerns. Local high streets are the lifeblood of what defines Britain today. The Love Your Local Market and Love Your High Street campaigns are not divided on political lines because we all support the incentive. Across the country, many local authorities of all political colours are currently looking towards their high streets and delivering and procuring good services from a variety of different providers. We need to recognise and applaud that—but, of course, there is always more work to do.

Motion agreed.