Q
111Paul
Farrelly: To examine your stance in more detail, I think
that you are right to moderate the stance that you have taken in your
submission, in response to the question from my right hon. Friend the
Member for Greenwich and Woolwich, because it is feasible that around
the rest of the country the proposal might be a goer, and the answer
“Well you cannot have it because it is only for London”
would not be
satisfactory. I
want to ask one final counter-factual or hypothetical question. Given
that the business rate is nationally determined—there is a
nationally determined pricing system—and that, particularly with
the current slump, certain areas of economic activity could be spurred
by business rate reductions, has your membership given any
consideration internally to the question of whether chambers of
commerce would support a business rate reduction Bill, which might
apply locally in different
areas? David
Frost: I am not sure we want to get into business
rate relocalisation. There is a view that there should be much more
local determination but, equally, many of our members and I have long
memories and remember the early 1980s, when local authorities were in
difficult times and levied substantial increases in the business rate,
often beyond 15 per cent. That acts as a drag on any debate about
relocalisation, which must be introduced if we are talking about
business rate reduction.
Q
112Paul
Farrelly: In
principle? David
Frost: In principle the idea of two authorities
competing, and one of them deciding to lower the business rate as a
mechanism to attract investment, would be a very valid way to do
things.
Q
113Robert
Neill: I have a couple of further questions,
Mr. Frost. You have been asked at some length about your
position on Crossrail. On what might happen if businesses outside
London wanted a structure for raising money for economic development,
does not the BIDs system cover
that? David
Frost: That is what we have said. We are extremely
attracted to the business improvement district concept, for reasons
that I have mentioned: transparency, the need for the community to sell
the concept, the twin track to getting a vote and the fact that a BID
is time-limited and must be renewed. For many of the programmes outside
London, that is the method and route that we should take. Our concern
is that if a BRS is introduced, the concept of BIDs will
dissolve.
Q
114 Derek
Twigg: It seems to me that your strongest
objection—you said that you do not have an objection in
principle—is that there are several areas in which councils can
introduce charges, such as congestion charges or workplace parking
levies, and the BRS will be another one. I think that you said there
was no coherence, which surprises me. Those are the sorts of tools and
mechanisms that councils will have, but it will be for the local
authorities, working with business, to set out the strategies for using
them. Surely, the supplement would be a case in point. I could be wrong
and may be being too generous, but I cannot imagine a council suddenly,
off the top of its head, producing a scheme without talking to business
or trying to develop a strategy that has to have the support of
business to take it
forward. In
some ways, are we repeating the arguments that we had in the
’70s and ’80s, when there were loony left councils and
when businesses were seen as part of the capitalist world, so we just
stuck rates on them. We have moved on tremendously in the past 20 or 25
years. The Financial Times made an important point that councils
have significantly raised their game in the past decade—we are
in a new environment, a new culture. Some Opposition thinking seems to
be based on the old situation, which existed back in the ’70s
and ’80s, and not on what exists today. There are much more
forward-thinking councils, which like economic strategies that involve
business—that closely involve business. Should we not be trying
to work this through, rather than saying, “Well, we don’t
believe it’s coherent”? It is for the local authorities,
with business locally, to make it
coherent. David
Frost: I said at the outset, relationships between
chambers of commerce and local authorities are extraordinarily strong,
for the reasons I expressed. However, I would simply point you at
Nottingham. The business community has made it absolutely clear that it
does not want workplace car parking charging, but the local authority
is determined to drive it
through.
Q
115 Derek
Twigg: But there is a difference between not getting the
agreement of business and saying that there is no coherence. Your
strongest argument seems to be that there is no coherence to the
measures. There is a
difference between that and agreeing or disagreeing. Local authorities
set out economic strategy, which you would be involved
in. David
Frost: No, it is not just about coherence, it is
about involvement. The reason why the BIDs have been extraordinarily
well embraced by communities up and down the country is that
involvement.
Q
116 Derek
Twigg: Involvement is not
agreement. David
Frost: No, but engagement or involvement do not mean
simply saying, “We’ll talk to you, ticking the box, but
we shall go ahead whether or not you agree with
us.”
Q
117 Derek
Twigg: But it does not mean, because you cannot agree on a
particular scheme, that the whole thing should fall. That is what you
are trying to
say. David
Frost: No, but what I am saying in terms of the
business improvement districts is that there has been a remarkable
amount of engagement and of agreement. However, I pointed out the
concern that, in Nottingham, the business community made it absolutely
plain that workplace car parking charges was not the way forward,
because they fall on one section of the community—yet the local
authority is going ahead. That acts as a
warning.
Q
118 Dan
Rogerson: I would like to return to the question of
compatibility and the similarity between this sort of approach and
BIDs. We
have already discussed ballots, which are part of the BID process. In
the view of your members, were ballots to be part of the BRS process
too, that would improve the measure. However, is it not important to
distinguish between BIDs and what we are talking about here? BIDs are
not designed to set up and fund infrastructure projects on the scale
that we are talking about—key projects to unlock economic
development across a whole county or area. Do you accept that that
purpose is a different one to that of a
BID? David
Frost: Not necessarily. If one looks, for example, at
Coventry, there is now a city-wide BID running there. BIDs are no
longer run purely for town centres or high streets. The vision included
in a lot of them is now far greater. I see no reason why the concept
could not extend county-wide, and certainly across borough
boundaries.
Q
119 Dan
Rogerson: That is interesting—it is not something I
had heard before. I understood—we have heard from Mr.
Raynsford, who was carefully stewarding local government matters when
BIDs were introduced—that they had a different purpose. Perhaps
we shall hear later from British BIDs about how that moves
forward. David
Frost: It could well be worth while looking at some
of the sums that could be raised in some of the metropolitan boroughs
from a BID, as opposed to a business rate supplement. You may well find
that the funding was far greater, because of the £50,000 minimis
on the RVs, which is not the situation with the BIDs. In certain areas,
it may be far more attractive to go the BID
route.
Q
120 Dan
Rogerson: On where a BID is already in operation and a BRS
might be imposed across a wider area over the top of it, where the BID
is focused on the town centre, what do you think should be the
interaction between the two? What do you think about
offsetting?
David
Frost: There may well need to be an offset. Clearly,
businesses will be concerned if they have signed up to the idea of a
BID and they appreciate what it is trying to do, and then in the
interim the idea of a BRS comes in, which is a much bigger strategic
issue but without the local involvement. They might say, “Well,
if we’re already paying one levy”—the business
rate supplement—“we’re not going to pay for a BID
next time round.” There is only a limited amount of money in the
pot.
Mr.
Field: May I come in on this issue, Mr.
Atkinson?
Q
121 Mr.
Field: You are a kind man, Mr. Atkinson. I am
intrigued because, what you have described, Mr.
Frost—perhaps you can tell us a little about how the scheme
operates in Coventry—sounds counter to the way in which BIDs
were supposed to operate, which was a much more localised process. You
referred to a city-wide BID in Coventry. Does it cover the entirety of
Coventry? David
Frost: It covers all of the borough, the city of
Coventry. It started off as a city centre BID and then last year moved
out into the whole metropolitan borough or
city.
Q
122 Mr.
Field: I think that is contrary to what was intended by
BIDs, which was that they should be far more localised. Perhaps it is
just an appreciation for my own constituency, where locations are often
two or three streets from the new west end, Oxford street and Regent
street and on one or two small alleyways just off that. So it operates
through the whole city, and all businesses—retail and
otherwise—pay their supplement towards a city-wide
BID? David
Frost: I can send you the details, but it is the
majority of
businesses.
Q
123 Mr.
Love: I am, in a sense, pursuing the point that has been
raised by Mr. Field and Mr. Rogerson. It comes
back to the question of coherence. Am I to believe that what you are
talking about is that local government bodies have a number of measures
to raise money, to which supplements will be an addition, and that what
you want to see is some connection with those measures to make
supplements a coherent choice for the local business
community?
David
Frost: First, there has to be coherence. Secondly,
there has to be involvement. Thirdly, there has to be some form of
guarantee that having paid one charge, businesses are not going to end
up paying another one on
top.
Q
124 Mr.
Love: Tell me how you think that this should operate. If
we introduced a business rate supplement, how would it operate in
connection with the other measures? For example, if there was a small
BID in the centre of a much larger area where the local government
wanted to have a business rate supplement for a transport
infrastructure development, which would help the whole
area, are you suggesting that the cost of the BID would somehow be
netted off? How would it work from your
perspective? David
Frost: It may be some form of netting off, so that
businesses are not going to pay the whole of a BID and then the whole
of a business rate supplement; there would be some form of agreement
that they will pay not 200 per cent., but perhaps 100 or 150 per cent.
of the sum. The details can be worked out, but the concern will be that
already having signed up for a BID and paid for it, businesses will
then get another layer through being asked to come back for the
BRS.
Q
125 Mr.
Love: But what the business community has been saying to
us across the board is that there has to be some justification for the
things that it is being charged for.
David
Frost:
Absolutely.
Q
126 Mr.
Love: If you take a retailer in the BID area, one of your
members, whom you have already shown that the cost of the BID to their
business is worthwhile because of the benefits they receive, and you
can then do that with the BRS, what would be wrong with charging for
both, so long as it can be justified in business
terms? David
Frost: But that is what I am saying about why we are
so attracted to BIDs. The local authority will have to go out to the
business community, having asked it what it wants, and say,
“Right, this is what we are proposing. You now get a vote on
this.” If those two criteria are met, it happens. They have that
certainty. The BID is there for five years, they have been forced to
sell it and the business community gets on and does it. With BIDs is
that, far from saying to a local authority that business does not want
to pay more tax, when business sees real benefits from doing it and
when it is effectively engaged, business will participate
actively.
Q
127 Mr.
Love: But you must recognise that there is an essential
difference between a small localised BID area—I am interested in
this idea that you can extend it through a whole city, but I think
would take it away from the original purposes, as Mr. Field
has already indicated—where it may be possible to do all the
things that you are suggesting we should do, and a much larger area
covered by a BRS, where it would be much more difficult to do
that. David
Frost: I have never seen a BID purely as covering two
or three streets or just Rugby town centre, for example. I have seen it
ultimately as operating across a borough. I have no problems with that;
it seems a very effective way of raising
money.
Q
128 Mr.
Love: You must be able to think of many cases where a BID
could be successful in a town centre because all the businesses there
could see the great advantages, but expanding it out into a whole
metropolitan area would be a much more difficult
sell. David
Frost: Absolutely. It may be a more difficult sell
and that is where I think businesses can be galvanised and enthuse both
the business community and, importantly, the local authority to say,
“Okay, this is the vision for this borough, this is the way we
want to take it. It is not just about building roads or a new railway
station. This is the economic development package. We appreciate that
we are not going to get all that money from central
Government. We need to raise more locally. Do you want to do it?”
I am confident that if that is put in place, in many areas it will
happen because the business community is
engaged.
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