Mr.
Dunne: Will the Minister enlighten the Committee on the
thinking behind making the rules and, in particular, variations on
ballots so different from the balloting process applying to BIDs? In
particular, I am concerned that variations could be used, if a project
overruns its original cost estimate, to extend the applicability of the
BRS to a wider range of businesses that might not be consulted on the
variation because they were not consulted on the original ballot. If I
understand correctly, the beauty of the BIDs balloting process is that
it is a dual voting system. Businesses not liable to pay the bids levy
have the opportunity to vote, because as they grow they might become
eligible for the scheme. A dual balloting system allows rapidly growing
businesses that would have been eligible at the time of the original
ballot, had they been that big at the time, to have a voice. Looking
into the future, flexibility in the rules on variations, as in the BIDs
model, would have some
merit.
John
Healey: The hon. Member for Ludlow was not with us at the
start of our proceedings this morning, when we had a detailed
discussion on the principal basis on which it is right to hold a ballot
on a BRS. In particular, we discussed why, in this respect, our
approach to BRS is different from our approach to BIDs. On BIDs, of
course, every business in the proposed area will have a vote,
irrespective of size, and may make a contribution. I do not propose to
rerun the arguments for our proposals for balloting on BRS, but no
doubt the hon. Member for Ludlow will be able to consult the
Official Report and come back if he feels that we have not dealt
with the
issue. On
the concern expressed by the hon. Member for Bromley and Chislehurst,
if the variation changes the proportion that the BRS contributes to a
project from a fifth to a quarter—as he suggested—or to
30 per cent., we still propose to take the approach with the variation
that is entirely consistent with the one that we take for the ballot
for the BRS in the first place. I explained in my opening remarks the
safeguards that are in place for businesses and the requirements that
will be in place for local or levying authorities in such
circumstances. In
response to the hon. Gentleman’s concern about cost changes,
whether they come from cost creep or optimism bias or any other factor
that might come into play, he may be interested to know that there is a
requirement in paragraph 23 of schedule 1—we have already
debated that schedule—for the local authority, in producing its
prospectus for a business rate supplement, to consider carefully and to
consult on the policy that it would have if the project were
to “(a)
cost more than the authority was
expecting; (b)
take more time to complete that the authority was
expecting; (c)
cost less than the authority was
expecting; (d)
take less time to complete than the authority was
expecting.”
No business will
therefore be in any doubt about the approach that the authority
anticipates taking in such circumstances. I hope that that reassures
the hon. Gentleman and enables him to accept that the clause should
stand part of the
Bill.
Robert
Neill: I understand what the Minister says and I do not
think that we will seek to vote against the clause. I hope that he will
reflect, and at an appropriate point, or perhaps now, confirm that he
would anticipate that if an authority were to set out its policy on
these matters in such bland terms that it amounted to a statement of
the obvious—such as, “It is the policy of the authority
to avoid cost overruns”—that would not be adequate to
meet the requirements of the Bill and there should be something
specific in the authority’s review and monitoring arrangements
to ensure that such a thing did not occur. Otherwise, one can envisage
that no authority will say that it is its policy to incur cost
overruns. The danger is that one does just enough to make oneself safe
from judicial review, but not enough in practice to carry out the
monitoring. Question
put and agreed
to. Clause
10 ordered to stand part of the
Bill.
Clause
11Liability
of non-domestic
ratepayers Question
proposed, That the clause stand part of the
Bill.
John
Healey: The clause sets out who is liable to pay the BRS.
It provides that any person who is liable to pay non-domestic rates for
a property is liable also to pay a BRS, subject to certain important
exceptions. Crucially, the clause provides that a person is not liable
for a BRS if the rateable value of their property does not exceed the
amount prescribed by the Secretary of State in regulations made under
clause 12. We made it clear in the October 2007 White Paper, and it
remains clear, that we intend to set that threshold at £50,000
rateable value. In addition, liability for the BRS does not apply to
owners of empty properties where there is a zero liability for
non-domestic rates, particularly charities and community amateur sports
clubs, or if the levying authority, under the powers given to it in the
Bill, has exempted owners of empty properties from the
BRS. Subsections
(4) and (5) provide the technical basis for determining the BRS. They
explain that it is done by calculating the amount for each day of the
year on which the ratepayer will be liable for the BRS and totalling
those daily liabilities. Subsection (6) defines the chargeable period
for a BRS as the period for which the supplement is imposed. Crucially,
subsection (6)(b) prevents the chargeable period starting before
the day on which the supplement is introduced; that will
prevent retrospective liability accruing before that day. Subsection
(7) limits the length of the chargeable period to that specified in the
final prospectus unless the period has been extended in accordance with
clause 10.
I shall leave
it at that, Mr. Atkinson. I hope that the Committee
will agree to the clause standing part of the
Bill.
Robert
Neill: I seek to raise two issues with
the Minister. I suspect that other hon. Members will wish to speak on
them.
We are now, in
shorthand, dealing with the question of the thresholds. The Minister
will know from the evidence given to the Committee that there is some
concern about how a threshold is arrived at. One knows the
Government’s intention to set a threshold of a rateable value of
£50,000, but we are concerned about what will happen in future,
particularly in the light of the fact that there will be a revaluation
of business rateable values in 2010. I understand that the base data
for that will probably go back to 2008.
Will there be
enough flexibility to reflect the changed economic circumstances in a
swift and timely manner? The particular concern, of course, is that for
many businesses cash flow is now the key to survival. They would not
want to be faced with a likely increase in burden simply because of a
fiscal drag in the threshold that might suck them in. They will want
some reassurance on that point.
Some who gave
evidence suggested that the figure of £50,000 should be included
in the Bill. Indeed, an amendment to that effect has been tabled by the
hon. Member for North Cornwall. I am not convinced, however, because
doing so would make it difficult to assist business by raising the
threshold to take people out of tax. Primary legislation would be
required, which is why I am not particularly attracted to that
argument. However, the underlying concern is real; businesses will want
a little more detail and more reassurance from the
Government.
The second
point, which is related, is a genuine inquiry; it may not take us any
further. I wonder whether any thought has been given to small companies
being treated under the section 382 provisions of the Companies Act
2006, when considering whether they met the other tests for threshold
liability. 5.30
pm
Mr.
Field: I wish to follow up the point raised by my hon.
Friend the Member for Bromley and Chislehurst, which he made very well.
We are clearly in more difficult economic times. The Minister is
right—I agree with my hon. Friend in that regard—that it
is better to have flexibility in the Bill rather than take up the
superficially attractive proposition made by the Liberal
Democrats.
What was the
thinking behind the £50,000 limit? Was it intended to encompass
a certain proportion of business, or is there something else implicit
in that sum? It is in no one’s interests to talk the economy
down, but if it were to happen in the retail sector, would it have a
significant impact by bringing more businesses within the BRS fold? In
the Government’s mind, are the provisions currently designed so
that a certain proportion of businesses should fall foul of or come
within the BRS
area? Let
me add that one reason why I left earlier today—some slightly
cheerier economic news—was that I had a lunch at the Regent
Street Association, a big retail association. Its news was much more
positive than some of the more gloomy retail news that one hears.
[Interruption.] I would certainly not use that
word, and the Under-Secretary would be most ill-advised to use
it—hopefully it will not appear on the record.
I had a point,
however. Where retailers are flexible, have a quality offering and, in
fairness as in central London, have a large tourist market—we
have felt the benefit of a lot of European and American tourists coming
here, our currency having devalued in recent months—the
situation is somewhat less gloomy than many of our newspapers and other
media outlets would have us believe. That is not to be in any way
complacent, but there is a mixed
picture. I
was trying to get to the bottom of the Government’s thought
processes. Were they trying to attract a certain proportion of
businesses into BRS, or was there something magical in their own mind,
at this juncture, about the £50,000
limit?
Mr.
Binley: I do not want to disappoint the Government too
much, but I can tell them that the reflections of my hon. Friend the
Member for Cities of London and Westminster would not be my reflections
from Northampton as to the well-being of the retail sector, frankly. It
may be that he represents a slightly more affluent body of electors
than I do. That may be the
explanation. Mr.
Lee Scott (Ilford, North) (Con): Does my hon. Friend agree
that, with the announcements that we have seen just in the past 24
hours, such as Barratts shoe shops going into administration with the
possible loss of up to 400 jobs, the implications of the business rate
supplements are grave for a number of businesses? We should be
concerned about
that.
The
Chairman: Order. I urge the hon. Member not to reply. We
are not having a debate on the general health of the economy. We are
talking about something rather more
limited.
Mr.
Binley: I of course accept your guidance and advice,
Mr. Atkinson. I dare not do otherwise. However, I seek your
guidance because we seem to be straying into clause
12.
The
Chairman: Indeed. We are in danger of straying into clause
12, and we have an amendment next with which we can discuss the
£50,000. Members, bear that in mind,
please.
Mr.
Binley: I shall make my remarks on the threshold with that
amendment.
Mr.
Dunne: In relation to the clause, during the evidence
session with the Minister I asked why exemptions would not apply to
public buildings of more than £50,000 rateable value. The
Minister gave me a clear reply. I asked if he would look again or
explain why, in relation to the exemptions permitted under
subsection (3)(a), the levy would not apply to those
properties exempted under section 45A of the 1988 Act. That would not
appear to cover many properties owned by types of entity that were
perhaps not in contemplation under the 1988 Act, because the form of
incorporation may not have been established or used for comparable
purposes. I am thinking of premises used by entities that may not be
charities but which have a charitable purpose, such as social
enterprises, not-for-profit organisations or
companies limited by guarantee, which are themselves not for profit.
Such organisations should have the benefit of the same reliefs as those
that do happen to be established as charities, perhaps for historic
reasons. I urge the Minister to consider broadening the exemption from
the non-domestic rate in the first place to such categories. If he
cannot bring himself to do that in this clause, perhaps he will
consider extending the reliefs available under clause 15 when we get
there.
John
Healey: I will deal with the points in reverse order, if I
may, beginning with those made by the hon. Member for Ludlow. I will
look at the Official Report, but I was not clear what
sorts of organisation or business he was arguing should enjoy reliefs
from the business rate supplement when reliefs are not established as
part of the business rates system. As I have explained to the
Committee, we are trying to build the business rate supplement to
follow precisely the terms of the business rate system. It is less
complex, more certain and, it seems to me, more equitable to do
so.
The importance
of the measures in clause 11 that the hon. Gentleman mentioned is that
community and amateur sports clubs and charities already have an
established relief in mainstream business rates legislation. We propose
to carry that over with the business rate supplement. I am not sure
that it is consistent or the right place in practice to introduce new
entitlements to relief from business rate supplement if those are not
already established within the business rate system. As I said, if I
might have some clarification about whose interests he was arguing for,
I will consider the matter, but that is our
approach.
Mr.
Dunne: I am happy to help the Minister. We talked about it
in the evidence session. I referred to publicly owned buildings such as
schools and hospitals, and he made the same point then that he
clarified just now. I was considering entities similar to those exempt
under subsection (3)(a), such as social enterprise and not-for-profit
organisations.
John
Healey: Unless such organisation have an established right
to relief within the business rates system as charities—many
social enterprises are also registered charities—or community
and amateur sports clubs, some of which are also registered charities,
it does not seem consistent or appropriate to create new categories of
relief within business rate supplement legislation. That is a matter
for mainstream non-domestic rates
legislation.
Robert
Neill: That is helpful. The Minister makes the point about
not desiring to create new categories of relief. May I take it, then,
that no representations have been made to him from any source seeking
to create new categories of relief through the Bill? For example, new
businesses might be exempt from liability to the business rate
supplement under the
Bill.
John
Healey: I have had no representations sufficiently
persuasive for me to believe that the current approach is the wrong
one. Clearly, if that becomes a matter of debate, it is a matter of
debate, and we will deal with it as and when it
arises.
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