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I am also grateful to hear the Minister’s determination to ensure that wherever such a project goes forward, the business community will have a role in its ongoing delivery and in the oversight of it. As the hon. Member for Bromley and Chislehurst (Robert Neill) said, the intention behind amendment 16 is to ensure that that is the case. However, I have noticed a tendency in other Bills for things to be left to be clarified later. Although I sadly do not have the resources at my disposal that the Minister does to test every thought that I have and to ensure that everything is drafted as it should be, I wanted new clause 1 to make the Bill more prescriptive and say that there must be a body that formalises the business involvement in an ongoing relationship.
I was also seeking to look at how the BIDs model works. The hon. Member for Cities of London and Westminster (Mr. Field) is absolutely right that BIDs and the BRS will do different things in different places. However, as models for delivery, they provide us with a starting point. I am seeking to press for such a vehicle with new clause 1. The right hon. Member for Wokingham (Mr. Redwood) was keen to pick holes in new clause 1 and to look for areas of disagreement. However, I welcome the fact that he and all other Conservatives Members who have spoken are keen that there should be a safeguard for businesses, so that they can be confident that they have a role to play.
Mr. Redwood: I was not trying to pick holes in new clause 1; I was trying to say that we need a structure that will work. That is what we are groping towards, but it is a pity that the Minister did not tell us whether the schemes would normally be local authority-run schemes or private finance initiative or public-private partnership-type schemes. However, we have to build on whatever command structure is in place and have accountability and representation.
Dan Rogerson: I am grateful to the right hon. Gentleman for that clarification. However, I am concerned that amendment 16 may not be quite as reassuring to the business community, in that it still puts the onus on the local authority to come up with the means.
The right hon. Gentleman talked about the proportion of business people on the body proposed by new clause 1 being only a third. However, the project delivery board would look at the oversight of the whole project. The BRS is part of the finance package, so it would be unfair for the business community to form all or half of that body if its funding was less than that.
Were new clause 1 to be added to the Bill, it might require some clarification, perhaps through discussions in another place. I am seeking to get something in the Bill that sets out clearly that the business community will have a role in the ongoing discussions on how a project is delivered. We are talking about a long-term commitment, and the right hon. Gentleman said that it was unfair to expect the business community to take on that commitment. I have spoken to business organisations—for example, when looking at BIDs and other systems—and it is clear that they can usually find a way through their representative bodies to ensure that the business community’s voice is heard.
Although I am pleased to hear that the Minister is looking at the issues closely and saying to local authorities in the guidance, “You need to show us how you’re going to involve the business community,” I am concerned that the nuclear option of the Secretary of State stepping in and saying, “You cannot proceed,” will not be used in many circumstances. Given that that sanction will be used only in rare circumstances, there is nothing that gives me huge confidence that there will be a systematic way for the business voice to be heard in the ongoing management of a project.
I am grateful to hear what the Minister said about amendment 1. I accept that there may be a need in some circumstances to move beyond that flexibility, but he has put on record his determination that the standard practice should be for everything to be in place at the beginning of the financial year, so that everybody knows what is coming and can plan accordingly.
To sum up my response to this debate, perhaps my new clause 1 is not perfect, but the Bill, too, is imperfect. By seeking to divide the House on my new clause, I hope that we can improve the Bill slightly and leave it to colleagues in another place to tighten up the detail.
Question put, That the clause be read a Second time.
The House divided: Ayes 56, Noes 261.
AYES
Alexander, Danny
Baker, Norman
Baron, Mr. John
Beith, rh Sir Alan
Brake, Tom
Breed, Mr. Colin
Brooke, Annette
Browne, Mr. Jeremy
Bruce, rh Malcolm
Campbell, Mr. Gregory
Campbell, rh Sir Menzies
Carmichael, Mr. Alistair
Clegg, rh Mr. Nick
Davey, Mr. Edward
Dodds, Mr. Nigel
Featherstone, Lynne
Foster, Mr. Don
George, Andrew
Gidley, Sandra
Goldsworthy, Julia
Harris, Dr. Evan
Harvey, Nick
Heath, Mr. David
Hemming, John
Holmes, Paul
Horwood, Martin
Huhne, Chris
Hunter, Mark
Lamb, Norman
Laws, Mr. David
Leech, Mr. John
Llwyd, Mr. Elfyn
Moore, Mr. Michael
Mulholland, Greg
Pelling, Mr. Andrew
Price, Adam
Pugh, Dr. John
Reid, Mr. Alan
Rennie, Willie
Rogerson, Dan
Russell, Bob
Sanders, Mr. Adrian
Simpson, David
Smith, Sir Robert
Stunell, Andrew
Swinson, Jo
Teather, Sarah
Thurso, John
Webb, Steve
Williams, Hywel
Williams, Mark
Williams, Stephen
Willis, Mr. Phil
Willott, Jenny
Wilson, Sammy
Younger-Ross, Richard
Tellers for the Ayes:
Susan Kramer and
Mr. Roger Williams
NOES
Abbott, Ms Diane
Ainger, Nick
Ainsworth, rh Mr. Bob
Allen, Mr. Graham
Anderson, Mr. David
Armstrong, rh Hilary
Austin, Mr. Ian
Baird, Vera
Balls, rh Ed
Banks, Gordon
Barron, rh Mr. Kevin
Battle, rh John
Bayley, Hugh
Beckett, rh Margaret
Begg, Miss Anne
Benn, rh Hilary
Berry, Roger
Betts, Mr. Clive
Blackman, Liz
Blackman-Woods, Dr. Roberta
Blizzard, Mr. Bob
Brennan, Kevin
Brown, Lyn
Brown, Mr. Russell
Bryant, Chris
Buck, Ms Karen
Burden, Richard
Burgon, Colin
Byers, rh Mr. Stephen
Byrne, rh Mr. Liam
Caborn, rh Mr. Richard
Caton, Mr. Martin
Cawsey, Mr. Ian
Chapman, Ben
Clapham, Mr. Michael
Clark, Ms Katy
Clarke, rh Mr. Tom
Clelland, Mr. David
Clwyd, rh Ann
Coaker, Mr. Vernon
Coffey, Ann
Cohen, Harry
Connarty, Michael
Cooper, Rosie
Cooper, rh Yvette
Corbyn, Jeremy
Cousins, Jim
Crausby, Mr. David
Cunningham, Mr. Jim
Cunningham, Tony
David, Mr. Wayne
Davidson, Mr. Ian
Davies, Mr. Dai
Davies, Mr. Quentin
Denham, rh Mr. John
Devine, Mr. Jim
Dismore, Mr. Andrew
Dobbin, Jim
Dobson, rh Frank
Donohoe, Mr. Brian H.
Doran, Mr. Frank
Dowd, Jim
Eagle, Angela
Eagle, Maria
Ellman, Mrs. Louise
Ennis, Jeff
Farrelly, Paul
Fisher, Mark
Fitzpatrick, Jim
Flello, Mr. Robert
Flint, rh Caroline
Follett, Barbara
Foster, Michael Jabez (Hastings and Rye)
Francis, Dr. Hywel
Gapes, Mike
Gardiner, Barry
George, rh Mr. Bruce
Gerrard, Mr. Neil
Gibson, Dr. Ian
Gilroy, Linda
Goggins, Paul
Goodman, Helen
Griffith, Nia
Griffiths, Nigel
Grogan, Mr. John
Gwynne, Andrew
Hain, rh Mr. Peter
Hall, Mr. Mike
Hall, Patrick
Hamilton, Mr. David
Hamilton, Mr. Fabian
Hanson, rh Mr. David
Harris, Mr. Tom
Havard, Mr. Dai
Healey, rh John
Hendrick, Mr. Mark
Hepburn, Mr. Stephen
Heppell, Mr. John
Hesford, Stephen
Heyes, David
Hill, rh Keith
Hillier, Meg
Hodgson, Mrs. Sharon
Hoey, Kate
Hoon, rh Mr. Geoffrey
Hope, Phil
Hopkins, Kelvin
Howells, rh Dr. Kim
Hoyle, Mr. Lindsay
Hughes, rh Beverley
Hutton, rh Mr. John
Iddon, Dr. Brian
Illsley, Mr. Eric
Ingram, rh Mr. Adam
Irranca-Davies, Huw
Jackson, Glenda
James, Mrs. Siân C.
Jenkins, Mr. Brian
Johnson, rh Alan
Johnson, Ms Diana R.
Jones, Mr. Martyn
Jowell, rh Tessa
Joyce, Mr. Eric
Kaufman, rh Sir Gerald
Keeley, Barbara
Keen, Alan
Keen, Ann
Kemp, Mr. Fraser
Kennedy, rh Jane
Khan, Mr. Sadiq
Kidney, Mr. David
Kumar, Dr. Ashok
Ladyman, Dr. Stephen
Laxton, Mr. Bob
Lazarowicz, Mark
Levitt, Tom
Linton, Martin
Love, Mr. Andrew
Lucas, Ian
Mackinlay, Andrew
Mactaggart, Fiona
Mallaber, Judy
Mann, John
Marris, Rob
Marsden, Mr. Gordon
Martlew, Mr. Eric
McAvoy, rh Mr. Thomas
McCabe, Steve
McCarthy, Kerry
McCarthy-Fry, Sarah
McCartney, rh Mr. Ian
McDonagh, Siobhain
McDonnell, Dr. Alasdair
McDonnell, John
McFadden, rh Mr. Pat
McFall, rh John
McGovern, Mr. Jim
McGuire, rh Mrs. Anne
McIsaac, Shona
McKechin, Ann
McKenna, Rosemary
McNulty, rh Mr. Tony
Meale, Mr. Alan
Merron, Gillian
Michael, rh Alun
Milburn, rh Mr. Alan
Miliband, rh David
Miliband, rh Edward
Miller, Andrew
Mitchell, Mr. Austin
Moffat, Anne
Mole, Chris
Moran, Margaret
Morgan, Julie
Morley, rh Mr. Elliot
Mudie, Mr. George
Mullin, Mr. Chris
Munn, Meg
Murphy, Mr. Denis
Murphy, rh Mr. Paul
Naysmith, Dr. Doug
Norris, Dan
O'Brien, Mr. Mike
Osborne, Sandra
Owen, Albert
Palmer, Dr. Nick
Plaskitt, Mr. James
Pope, Mr. Greg
Pound, Stephen
Prentice, Bridget
Prentice, Mr. Gordon
Prescott, rh Mr. John
Primarolo, rh Dawn
Prosser, Gwyn
Purchase, Mr. Ken
Purnell, rh James
Raynsford, rh Mr. Nick
Reed, Mr. Andy
Riordan, Mrs. Linda
Robertson, John
Robinson, Mr. Geoffrey
Rooney, Mr. Terry
Roy, Mr. Frank
Roy, Lindsay
Ruane, Chris
Russell, Christine
Ryan, rh Joan
Salter, Martin
Sarwar, Mr. Mohammad
Seabeck, Alison
Shaw, Jonathan
Sheerman, Mr. Barry
Simon, Mr. Siôn
Simpson, Alan
Singh, Mr. Marsha
Skinner, Mr. Dennis
Slaughter, Mr. Andy
Smith, rh Mr. Andrew
Smith, Ms Angela C. (Sheffield, Hillsborough)
Smith, Geraldine
Smith, rh Jacqui
Smith, John
Snelgrove, Anne
Soulsby, Sir Peter
Spellar, rh Mr. John
Spink, Bob
Starkey, Dr. Phyllis
Stoate, Dr. Howard
Strang, rh Dr. Gavin
Straw, rh Mr. Jack
Stringer, Graham
Stuart, Ms Gisela
Sutcliffe, Mr. Gerry
Tami, Mark
Taylor, Ms Dari
Taylor, David
Thomas, Mr. Gareth
Thornberry, Emily
Timms, rh Mr. Stephen
Tipping, Paddy
Todd, Mr. Mark
Truswell, Mr. Paul
Turner, Dr. Desmond
Turner, Mr. Neil
Twigg, Derek
Ussher, Kitty
Walley, Joan
Watts, Mr. Dave
Whitehead, Dr. Alan
Wicks, rh Malcolm
Williams, rh Mr. Alan
Wills, rh Mr. Michael
Wilson, Phil
Winnick, Mr. David
Winterton, rh Ms Rosie
Wood, Mike
Woolas, Mr. Phil
Wright, Mr. Anthony
Wright, David
Wright, Mr. Iain
Wyatt, Derek
Tellers for the Noes:
Ms Dawn Butler and
Helen Jones
Question accordingly negatived.
‘(1) The 2003 Act is amended as follows.
“41A Additional arrangements where business rate supplement imposed
(1) In any business improvement district where a business rate supplement under the Business Rate Supplements Act 2009 has been imposed, a property owner BID levy may be imposed on the owners of a non-domestic property, or a class of such owners, in the district.
(2) A non-domestic ratepayer who is liable to pay the BID levy on a hereditament is not liable for a property owner BID levy on that hereditament, and may not take part in a property owner ballot in respect of that hereditament.”.
(3) In section 46(1) (description of non-domestic ratepayers liable for BID levy to be specified) insert at end “, and, where applicable, the description of property owners who are to be liable.”.
(4) In section 49 (BID proposals) after subsection (2) insert—
“(3) A levy on property owners may come into force only where it is approved by a ballot of the property owners in the proposed business improvement district who are liable for the proposed property owner BID levy.”.
(5) In section 50 (approval in ballot) after subsection (6) insert—
“(7) A property owner BID levy is not be to regarded as approved by a ballot held for the purposes of section 49(3) unless the two conditions set out in subsections (2) to (6) are satisfied.”.
(6) In section 55(2) (regulations about ballots)—
(a) in paragraph (b) after “ratepayers”, insert “and property owners”, and
(b) after paragraph (h) insert—
“(i) enabling the billing authority to construct a list of all property owners in the BID area for the purposes of holding a property owner ballot and billing.”.’.— (Mr. Raynsford.)
Brought up, and read the First time.
Mr. Nick Raynsford (Greenwich and Woolwich) (Lab): I beg to move, That the clause be read a Second time.
Mr. Deputy Speaker (Sir Alan Haselhurst): With this it will be convenient to discuss amendment 4, in title, line 3, after ‘development;’, insert
‘to make provision about business improvement districts in consequence of the imposition of a business rate supplement;’.Mr. Raynsford: New clause 2 concerns the interface between business rate supplements and business improvement districts. Although both relate to the promotion of the local economy, BIDs are different from BRSs in a number of respects, as the hon. Member for Cities of London and Westminster (Mr. Field) pointed out. In Committee we examined the differences between the two, highlighting the degree to which the BRS is more likely to support larger-scale, longer-term investment—including infrastructure—whereas BIDs have focused primarily on short-term improvements to enhance the attractiveness, commercial success and security of retail and commercial areas. However, there are similarities. Both are based on the principle of partnership between local authorities and business to promote the local economy. Both involve a levy on the ratepayer—who is the occupier rather than the owner of the property—on top of the normal business rate.
As the Minister responsible for overseeing the introduction of BIDs some six or seven years ago, I am naturally pleased that they have proved to be a success, particularly because—this is another feature common to both BIDs and BRSs—they were not uniformly welcomed when we introduced them. I recall the Opposition’s hostility when we debated the local Government Act 2003. I hope that, just as with the passage of time they have come to recognise that their opposition to BIDs was misplaced, they will come to see over the passage of time that their current opposition to the BRS is also misguided.
Over those six years, there has been a significant growth in the number of BIDs and in their contribution to improving the economic performance of commercial areas in towns and cities all over the country. Dr. Julie Grail is the chief executive of British BIDs, the umbrella body for BIDs throughout the country. During one of our evidence sessions at the beginning of the Bill’s Committee stage—I join the Members who have rightly emphasised the value of those sessions—she told us that 76 BIDs were now operating throughout the country, nearly 20 of them in London.
BIDs can be set up only after a yes vote on a dual-key basis by all the businesses that will be liable for the levy. They are also subject to periodic renewal ballots. The key issue that prompted the new clause was the fact that 14 existing London BIDs are due to be subject to such ballots within the next two years. At precisely the same time, business rate payers will begin to face the business rate supplement for Crossrail. Not surprisingly, Dr. Grail and many others who have been involved in the successful development of BIDs fear that when confronted with both the BRS for Crossrail and the ongoing cost of supporting their local BID, some business rate payers, particularly in difficult economic circumstances, will conclude that they cannot afford to continue to support the BID.
Angela Watkinson (Upminster) (Con): How can participating businesses agreeing to the establishment of a business improvement district know the extent of their future liability?
Mr. Raynsford: One of the arrangements that has applied throughout the evolution of BIDs is a proper procedure for defining the objectives of a BID and the level of contribution that will be expected before the proposition is put to a vote, so that when business rate payers come to vote, they will know whether they are receiving value for money. That is a well-established arrangement, and all who are experienced in the way BIDs have operated know that it has proved successful. When businesses feel that a BID will enhance the value of their area, they are likely to vote yes—and, as Dr. Grail pointed out, they have done so in 76 areas.
Angela Watkinson: Does that mean that when the initial objective has been met and a new project has been proposed, the participating businesses will be entitled to another vote?
Mr. Raynsford: I am sorry if the hon. Lady did not entirely follow what I said earlier. As I explained, the BID legislation provides for renewal ballots every five years, which means that a BID must submit its proposal to the business rate payers who contribute to it every time it seeks a renewal of its status.
Unlike the BRS for Crossrail, which relates to a single, albeit very large, project, BID schemes usually involve a variety of different arrangements. A scheme may be intended to improve security, perhaps by providing additional policing to enhance shoppers’ safety in a retail area. It may involve environmental improvements to make an area more attractive to visitors, or transport improvements to make it more accessible. It may involve promotional work to attract people who would otherwise not be aware of what was available in a shopping centre.
It is entirely up to the BID body itself to decide on its programme. However, that programme must be set out in advance of the first ballot, and when it is due for renewal the BID will be required to set out its programme for the following year. There is a well-established procedure enabling the parties invited to contribute to BIDs to know what they would be getting, and to say either yes or no to it in a ballot.
Although BIDs have generally been successful and are widely seen as such throughout the country, and although the improvements to the local economy which they support are rather different from those supported by the BRS—which, in the case of London, will support the hugely important Crossrail scheme—there is a real risk that, following the introduction of BRSs, several BIDs that are due to be subjected to renewal ballots in the next two years will not survive. That, in my view, would be a very unfortunate consequence. The purpose of my new clause is to find a solution that does not pit BIDs against BRSs, or put either at risk.
The new clause addresses the problem by returning to an issue that has been debated long and hard since BIDs were first introduced: the contribution that might be made by property owners in bid areas to support activity from which they stand to benefit considerably. The BID model was originally developed in north America, where the contributions from the business side come from property owners rather than occupiers. In adapting the model to United Kingdom circumstances, in which business rates are levied on occupiers, we concluded that the BID levy should also apply to occupiers. However strong the argument was for imposing the levy on landowners—and we received forceful representations from many quarters, including property owners who felt that that was right and equitable—it would have required the establishment of a wholly new register of commercial property ownership throughout the country so that property owners could be balloted in the first place and the local authority could subsequently impose the levy, assuming that there was a positive vote. Not only would that have imposed significant cost burdens on local authorities, but it would have been a major bureaucratic exercise and, crucially, delayed the implementation of the BID scheme. At the time, there was a real appetite among the business community, town centre managers and many others to get a move on with BIDs to ensure that the benefits that many saw would come from the establishment of BIDs could be achieved.
2.30 pm
Mr. Brian Binley (Northampton, South) (Con): I understand the thrust of the new clause and I have some sympathy with it. However, my concern is twofold. First, if the property owner is liable for the BID, at the next lease review is not the cost likely to be placed on the lease? The business user is therefore likely to face the cost anyway. Secondly, how does this relate to accounting? If there is a BID in one town but not in another, the cost may increase in one town but not in another. However, competition between the two may be keen.
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