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Business Improvement Districts Bill [H.L.]

7.10 p.m.

Lord Jenkin of Roding: My Lords, I beg to move that this Bill be now read a second time.

Few planning issues have generated more controversy in this country than the burgeoning of out-of-town shopping centres. That they are very popular with those who can use them is clear; that they can threaten the prosperity or even the viability of existing town centres is a cause of much anxiety. The last Government, in issuing Planning Policy Guidance Nos. 6 and 13, introduced significant new planning constraints on the building of further out-of-town centres. Successive governments over the years have given the regeneration of inner cities a steadily rising priority. I have no doubt that this policy--restrictions on out-of-town centres and support for inner city regeneration--will be continued by the present Government.

One of the reasons why shoppers prefer the out-of-town shopping malls is that they may find their town centres unattractive, dingy, often unfriendly and even unsafe. To meet this challenge, many towns and cities are now taking positive action to help their town centres to fight back. The Association of Town Centre Management, to which I pay tribute, has been a welcome catalyst in promoting this movement. In August of this year it published a very comprehensive consultation document on what it called "town improvement zones". I hope the House will forgive me if I continue to talk about business improvement districts, because that is the title of the Bill. They are, in fact, much the same.

What the Bill seeks to do is to add a new arrow to the quiver of measures already available to make this policy a reality. It provides a mechanism to enable the business ratepayers in a town centre or other defined commercial area, which we call a business improvement district, to set up a company to carry out improvements in the area and to secure the necessary finance from the business ratepayers in that area.

The Bill is thus an enabling measure. It is not a substitute for existing urban regeneration instruments but an addition. Nor does it affect the argument--it is important to make this case--one way or the other for returning, or localising--the expression used by the DETR--the business rate and returning it to the local authorities where it is levied.

The subject of urban regeneration has long been a particular interest of mine. Perhaps I should declare an interest as the founder president of the British Urban Regeneration Association, though I hasten to say that I handed over the presidency nearly a year ago to a distinguished successor, Sir Jeremy Beecham. I am also one of the joint presidents of the Association of London Government, the body which speaks for the 32 London boroughs.

Last March I introduced the Second Reading of the ALG's London Local Authorities Bill. Proposals for BIDs--if I may use the acronym--had been included in that London Bill, but the association decided that they

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should be withdrawn because one or two boroughs were not happy with the provisions proposed. In that debate I foreshadowed then that I would bring in a Private Member's Bill on BIDs. Well, my Lords, this is now it.

The Bill therefore owes much to the ALG's original initiative; but it has been greatly developed, at the Association's suggestion, by the Corporation of the City of London, which has suggested the framework by which BIDs might be introduced through what will be national legislation.

It is most appropriate that the City corporation should have become involved because for years it has been very active in exploring mechanisms by which private finance might be harnessed to push forward initiatives which would benefit the business and the broader public. As part of that exercise the corporation has studied the BID concept in some detail. It commissioned research on the subject, and a report by Professor Tony Travers, who is extremely well known in this field, and Mr. Jeroen Weimar was published in September last year.

The setting up of business improvement districts is an idea which had its origin some decades ago in the United States. The concept has been taken up by other countries, notably in Canada. In the US, BIDs provide a range of local environmental improvements such as landscaping and street furniture, such services as security, closed circuit television and additional, or perhaps higher, standards of street cleansing and refuse collection. The arrangements are put in place primarily for the benefit of the businesses within the district in the expectation that this will lead to increased trade. When this happens--as it does in the huge majority of cases--the whole area benefits. Customers and confidence return; property values are enhanced; and decline is arrested, even reversed.

In this country there is now a substantial number of town centre management schemes. In some cities--Coventry is a very good example--they have developed to the stage where the oversight of the services provided by the schemes is put in the hands of a company specifically set up for the purpose, so that, in a sense, in this Bill we are advancing down a road that has already been opened up.

In another place the Environment Select Committee has produced two reports on shopping centres, the second of which appeared as the committee's fourth report in the last Session of Parliament. Both that report and the report of the Association of Town Centre Management to which I referred a moment ago recognised that a crucial issue of these improvement schemes is how they are to be financed. There is a growing recognition that the problem of what is referred to increasingly as the "free riders"--those who benefit from the improvements but decline to contribute financially--must be tackled. To quote paragraph 7.3.3 of the association's discussion report:

    "Private sector participation in a TIZ [town improvement zone] needs to be encouraged. Enabling legislation to allow the

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    introduction of a voluntary levy will need to be considered, especially as existing TCM schemes are already highly dependent on a small number of corporate backers. Unless"--

this is the key sentence--

    "non-participation is addressed then many existing schemes, including TCM"--

town centre management--

    "and SRB-established partnerships"--

single regeneration budget--

    "will be unsustainable in the long run and opportunities to develop further town centre partnerships reduced".

I stress that point because that is the heart of what the Bill is about. The central purpose of the Bill is to address the issue of free riders by providing that once a decision has been made to set up a BID--I shall describe the process in a moment--all business ratepayers within the defined area of the BID will be required to make a contribution up to a maximum of 5 per cent. of the business rates paid in the area unless they are excluded under the terms of the scheme. The trigger requiring contributions from all ratepayers arises if a simple majority of business ratepayers within the area, measured both by number and perhaps more significantly by rateable value, agree that a BID should be set up. For the minority who do not agree, the payment will of course be obligatory; that is to say, they will not be able to opt to become free riders.

To ensure a high level of consensus and that it is the free riders who are targeted, I would be very ready to consider that perhaps a simple majority is not enough and that we should look for a somewhat higher majority of perhaps the order of two thirds or thereabouts. I shall be very interested to hear the views of noble Lords on that.

I turn briefly to the details of the Bill. Clause 1 provides for the local authority, on receipt of an application to establish a BID, to test opinion among business ratepayers through a BID election order. Although any business ratepayer can apply, in practice it is unlikely that an application would suddenly appear, as it were, cold. It is much more likely to arise following a period of discussion and dialogue between the interested parties. Indeed, a BID may emerge from an existing partnership arrangement.

Apart from the business ratepayers in the area, these interested parties could well include the local authority. Indeed, I have heard it said that to be successful a BID would have to have the active support of the local authority. They could include building owners. The applicant will be responsible for informing the other ratepayers affected irrespective of prior dealings.

Clause 2 provides that the application has to be accompanied by a business plan, which is referred to in what one has to call in parliamentary counsel language, a "draft scheme". Apparently, the words "business plans" are not acceptable in this context! It sets out details such as the precise area of the BID, the improvements proposed, their cost and the charge that that will imply for businesses in the area. The proposal will also set out the proposed duration of the scheme, which will be for a maximum period of five years. I say

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straightaway that I have heard suggestions that perhaps that is too short or that there should be provision for an extension.

The scheme might well propose an exemption or abatement of the charge for particular ratepayers. For instance, there could be no more than a nominal sum, or even nothing at all, charged to the smallest business ratepayers.

Clause 4 empowers the local authority to make an election order, but an important safeguard is that it does not have to do that. For example, a local authority could take the view that the proposed scheme will not benefit the contributing ratepayers in the area, looking at the business improvement district as a whole. They may take the view that on the information available to the local authority the scheme is not commercially viable. In such circumstances it is open to the local authority either to amend or even reject the scheme and ask for matters to start again.

In Clauses 5, 6 and 7 the Bill spells out the detailed procedures and I need not go into them in greater detail. The Bill enshrines the very important principle of additionality in Clause 9; namely, that the services paid for and provided under the BID scheme must be additional to, and not in substitution for, the services provided by the local authority. Here again, consultation has produced an interesting thought. I know of at least one potential scheme where the local authorities and the potential BID promoters could agree that the BID company might, under contract, run some of the local services in their area; for instance, street cleaning, refuse collection, security and so on. But it has to be additional. It is not just a question of the local authority withdrawing and leaving the BID company to take up all the services.

As I believe it will have been apparent, the Bill has been the subject of consultation with a very wide range of interests. Many useful comments have been made and a number of changes have been canvassed. I have already mentioned the possible change to the threshold level for triggering a BID. Another comment which came to my attention quite recently is that there is a case, which I believe I can accept, for including a specific provision requiring a local authority, when it is considering whether or not to make an election order to set up a BID, to consider any representations not only by building owners, but also by local residents who pay the council tax.

So there is ample scope for some good debates in Committee and I hope that we shall get to that. One of my early mentors used to say, "Define and you have it in outline: illustrate and you have it in the round". Perhaps I may illustrate as I close with two or three schemes which this Bill could help. Today's Financial Times contains an interesting article about a part of London which has come to call itself "Fitzrovia". That is a large residential and commercial area between Oxford Street and Euston Road. Part of it lies in the London Borough of Westminster and part in Camden. The promoters of the Fitzrovia scheme want to see, among other things, a higher quality of street maintenance services than the local authorities are prepared to

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provide. One of the leading figures in the area, Mr. Stephano Fraquelli, who is chief executive of the Spaghetti House chain--and this gives one something of the flavour of the kind of people who are interested in this type of scheme--is quoted as saying that he believes that BIDs should be established on a statutory basis. It may well be that they will be able to continue to run theirs on a voluntary basis, but there are plenty of others who have said that that gives rise to great difficulties and particularly to that of the free riders.

Turning to another part of the country, in Bristol the Broadmead initiative covers a substantial shopping area just outside the main city centre. It has made excellent progress as a voluntary scheme. But I was told only this week that it would welcome this Bill, again, to gain contributions from the few significant shops in the area which so far have refused to pay. It would be invidious at this stage to name them publicly.

Finally, in west London I met representatives from the Park Royal Partnership. That is an organisation which brings together the public and private sectors for the purpose of regenerating what is London's largest business park. It contains over 1,200 businesses and provides about 35,000 jobs. It is located within three London boroughs. It is partly in Brent, partly in Ealing and partly in Hammersmith and Fulham. All three authorities are enthusiastic supporters and founder members of the partnership.

The Park Royal Partnership has been highly successful in implementing ideas that have attracted inward investment and new employment to the area. However, they told me that the need for a more active area management has become evident, particularly one that can be financed and implemented on a sustainable basis. They told me,

    "We believe that your initiative in sponsoring a BID [Bill] represents an innovative yet realistic method of securing the long term sustainability of regenerated areas."

Those are three very different schemes. They are all enthusiastic about the possibilities that this Bill will open up. I have no doubt that there are many others across the country. I hope that I have said enough to demonstrate both the need and support for this Bill.

We all want to see the revival and wide prosperity of our town and city centres. The Bill has a wide degree of support. It has local authority support, business support and local support in the areas concerned. Therefore, I hope that the House will enthusiastically give the Bill a Second Reading. I beg to move.

Moved, That the Bill be now read a second time.--(Lord Jenkin of Roding.)

7.29 p.m.

Lord Monkswell: My Lords, I think that I have to thank the noble Lord, Lord Jenkin of Roding, for introducing the Bill. I do not do so because of its content, but only because of the able way in which he explained its provisions. I was interested to hear the noble Lord stress the dislocation to business caused by the emergence of out-of-town shopping developments. Also, it is curious to think that although this Bill was

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originally part of a Bill applying to Greater London only, the new edifice that is now before us will apply nationwide.

Perhaps I should explain immediately that I am instinctively against the Bill. It introduces hypothecated taxation. It introduces taxation determined by business rather than by a community of people and it re-introduces the concept of the business vote. I am concerned that its provisions could cause divisions rather than bring people together. The Bill risks creating first and second-class districts and could, in practice, create more insecurity, poorer environments and what one might describe as "knocking copy" marketing of business districts, with business districts saying, "Our business district is better than the one down the road. Aren't they a shower?"

I could, but I shall not, review the historical development of our democracy, with the development of the franchise from freeholders to ratepayers and eventually to the virtual full adult franchise that we have today. I am sure that many of your Lordships are far more knowledgeable about that than myself. However, we do ourselves no harm if we remind ourselves occasionally of our history; otherwise we may forget and we may fail to take its lessons on board.

One of the problems with this Bill is that it would give advantage to what perhaps I may describe as "better off businesses" to the detriment of poorer businesses in the sense that a better off business area would be more able to fund improvements through the funding arrangements outlined in the Bill as compared with a district with a poorer range of businesses. Indeed, the Bill demonstrates the advantages of the way in which we used to do things. A local authority used to have the ability to invest in improving districts with, for example, better street lighting. Business prospects would improve as a result and the revenue stream to the local authority would then increase through the increase in the amount of local business rate payable.

It might be useful to review some of the things that happened to local authorities under the last government. First, they suffered financial cuts in both their capital spending permissions and in their revenue support. Secondly, we saw the destruction of the metropolitan counties and the GLC. Thirdly, there was the nationalisation of the non-domestic rate. Never let it be said that Tories are against nationalisation. Furthermore, the poll tax and mass unemployment did not help. The presumption of the Thatcher years was that private was good and public was bad. We now have a new government who have started on the long road back to sanity, social justice and fairness.

Local communities have also had to contend with the emergence of the urban development corporations. We all recognise that they have had only mixed success. It is interesting to think that the one edifice that will probably be seen in time to symbolise the Thatcher years is Canary Wharf. I believe that its address is 1 Canada Square. That building destabilised the whole of the London property market and London's transport system. It led to the bankruptcy of its developers who later bought it back at a knock-down price. All of that

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happened under the aegis of the London Docklands Development Corporation. So we have had some experience of how business does things; perhaps it is time to give democracy a chance.

Business improvement districts are a North American development. I suggest that North America's history, experience and--dare I say this--population density, are different from those in Europe. That brings me to my first concrete question for the noble Lord, Lord Jenkin of Roding. I hope that he will be able to answer it when he responds at the end of the debate. Does the noble Lord have any information about the experience of other European countries? Have any of them gone down the road that he is suggesting? How do they organise things in their towns and cities?

My second specific question is directed at my noble friend Lady Farrington of Ribbleton. Can she give any timescale for the repatriation of the non-domestic rate back to local government? That would help to build that symbiotic relationship which could, and should, exist between the local business community and local people through their democratic structures and it would enable all local enterprises and people to work together.

The genesis of this Bill was before the general election when local authorities did not know whether a Labour Government would be elected and wanted anything that they could lay their hands on which might help them with their difficulties. I hope that with the election of our new government, the promoters of this Bill will realise that there are better ways of doing things than this.

7.36 p.m.

Baroness Ludford: My Lords, I apologise for rising to speak without giving notice. I had not expected to be here but I have been liberated from another commitment. I shall therefore be brief and leave it to my noble friend Lady Hamwee to make the main response from these Benches.

I should like to speak on the role of local authorities. I should declare an interest as a councillor in the London Borough of Islington. I very much welcome the genuine partnership envisaged in the Bill, which means that applications to set up business improvement districts are initiated by business, but have to be approved by local authorities. That is much more rooted in the local community than our experience in the past 18 years with urban development corporations, single regeneration budgets, City Challenge and so on.

The noble Lord, Lord Jenkin of Roding, was right that the active support of the local authorities will be a necessary ingredient in the success of business improvement districts. I am concerned that, as set out in Clause 4, the reasons that a local authority might give for deciding not to approve a BID are somewhat limited. There could be other valid reasons than those sketched in that clause for not approving a BID; for instance, it might distort the council's overall regeneration strategy, or the proposed improvements may not be supported by residents, although the "residents" may not necessarily be those in the immediate locality of the BID, but those outside the area. One can envisage wrangles about

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whether a local authority was justified in not approving a BID. The local authority might not be anti-business or against making improvements in the area, but it may feel that that BID does not fit into its wider strategy. That may lead to judicial review, which would be unfortunate. As the noble Lord, Lord Jenkin, said that the Bill is not intended to be a substitute for existing urban regeneration strategies, I wonder whether some thought might be given to that aspect of the Bill to ensure that those concerns are reflected in its wording.

7.39 p.m.

Baroness Hamwee: My Lords, the Chamber is a little empty to give the rousing enthusiasm for which the noble Lord, Lord Jenkin of Roding, had hoped for his Bill. However, we on these Benches very much support it although not uncritically.

I thank the noble Lord for introducing the Bill. It is well worth discussing such innovations for local communities and local authorities. I thank also the Association of London Government and the City of London Corporation for their work. I am delighted that my noble friend Lady Ludford has been able to contribute to this debate, albeit briefly. Her experience as a councillor of an inner city borough gives her a particular perspective. We are lucky that those who are participating in this debate and no doubt at later stages have a considerable spread of local government experience. I too should declare an interest as a London borough councillor.

No one who believes in local democracy can fail to welcome scope for a section of the community to make improvements in that community. I am not as optimistic as the noble Lord, Lord Monkswell, about any changes that the new Government may introduce. I hope that I shall be proved wrong. Indeed, no one who believes in local autonomy can deny the right of a section of a community to exercise its own judgment and, put colloquially, do its own thing. No one who wants to see greater investment in environmental improvements, community safety, local transport schemes, traffic management schemes and so on can deny new opportunities for investment in such schemes.

Noble Lords may detect from my speech that while we on these Benches welcome this Bill, we have reservations. I hope that those reservations are capable of being answered, although I suspect that some of the answers may lie more in the behaviour of those involved in the schemes than in the Bill itself. Schemes such as these will depend crucially on partnerships. Partnerships can be regulated to some extent, but they are also a matter of personality, understanding and tolerance. Perhaps our job in this Chamber is to test how far structures can be made to ensure the success of schemes without prejudicing the immediate interests of those who are closely involved, such as local businesses, particularly small ones, and the interests of the wider community.

I do not want it to be thought that members of local authorities criticise business improvement districts on the basis that they have not been invented here. I hope and believe that most councillors will have an overriding

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concern for their communities and that that will overcome that problem. But I believe that most councillors, certainly Liberal Democrat councillors, are passionate about democracy, accountability and fairness. I should like to see the structure underpinning the BID arrangements meet that test.

Much has been made of additionality, and rightly so. The noble Lord, Lord Jenkin of Roding, spent some time on this subject in his speech. But one wonders whether in the real world a BID will be an additional piece of work. I take a trivial example. If a local authority knows that hanging baskets are to be provided in a high street, will it consider putting up further hanging baskets or make other environmental improvements in the high street, or will it consider other streets that are in need of cheering up? More importantly, if it knows that the high street is a target for improvement under a scheme, will it treat business-funded improvements as additional to the amount that it would have spent had there not been a scheme in place?

We all know the real world of hard-pressed local budgets. One wonders how Section 9 could be enforced other than perhaps by the very cumbersome mechanism of judicial review which I certainly would not welcome. How will a local authority or even a regional development authority under the arrangements that are shortly to be introduced be influenced by BIDs? Will the priorities for investment and regeneration be skewed by the possibility of money coming from a particular source? It is the very job of local authorities to take an overview.

My noble friend Lady Ludford spoke of the strategic elements, and rightly so. Local authorities must look at economic development and regeneration in the widest sense and ask whether whatever is going on in their areas will benefit the whole community or just a small part of it. It would not matter if a small part received a benefit provided there was no conflict between different groups. For example, perhaps a group of retail businesses may want a street to be pedestrianised with a view to encouraging tourism, whereas local residents may be keen to see that street serve a very local purpose as a local shopping area. There would be different interests and tensions.

I am not yet sure how those could be resolved. Would the residential community be adequately involved? What about small businesses? One imagines that in some areas the keeper of a corner shop may have different interests and resources behind him from those of substantial businesses in the same street. How is that small business person to be protected? What advantages would there be in a BID which did not appear in a TIZ (town improvement zone)? I apologise for using these acronyms. If there is no voluntary agreement to improve an area should there be compulsion, particularly where there is only a simple majority in terms of the rate payable? I welcome the indication given by the noble Lord, Lord Jenkin of Roding, that he is open to amendments on this point.

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I take the point that has been made about free riders and that businesses will not be altruistic in their approach to schemes. I understand that in the United States schemes have been initiated for very hard-headed commercial reasons. Much of this will be self-regulating in terms of the initial assessment by local authorities of schemes that come before them and the general good working relationships, one hopes, between the various local partnerships that have emerged.

Like other noble Lords, I cannot let this moment pass without commenting that perhaps we might better spend our time in seeing how to return non-domestic rates to local control. That is an issue of which we should not lose sight. I do not want to end my speech on a sour note. Partnerships require tolerance and flexibility but they also need the right environment. The partners need to be introduced to one another. I hope that this type of arrangement will achieve that. BIDs may not be marriages made in heaven--or even in this Chamber--but they can be a useful means of bringing people together for the benefit of the whole community. I recognise that there are safeguards in the Bill which will address some of the concerns that I have voiced. I look forward to exploring at Committee stage how those safeguards can be made watertight.

7.48 p.m.

Baroness Farrington of Ribbleton: My Lords, I too am grateful to the noble Lord, Lord Jenkin of Roding, for having the foresight to bring forward this Bill. To echo the words of the noble Baroness, Lady Hamwee, the contributions of noble Lords have been of high quality. They demonstrate that there is an interest in the management and regeneration of our town and city centres.

Over recent years town and city centres have faced a number of competing pressures. Everyone is aware of the impact of out-of-town shopping centres. Places such as the MetroCentre and Lakeside have been enormously successful in attracting huge numbers of customers, filling their car parks by the early morning. This has demonstrated the reality that customers are more selective in their shopping habits and are more mobile. They are becoming accustomed to a high degree of comfort and choice in their shopping. I am sure we all know of local centres that suffered in the face of such competition, as well as the economic recession of early 1980s.

I am pleased to say that our established town and city centres have not laid down and given up the ghost. They have responded with the development of an increasing number of strong and innovative partnerships between those bodies with most to gain from the revitalisation of the core areas. Local authorities, retailers, landlords and local communities all have a vital role to play. There are now over 200 partnerships in place around the country helping to regenerate the shopping areas to which the Bill refers. They are helping to ensure that the quality, composition and condition of the centre are taken into account. This helps to achieve and secure the vitality of the area. Towns and cities need to attract customers. In an increasingly competitive market place they need to offer a variety of attractions--shopping, workplace,

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leisure activities, cultural and social focal points. More specifically, people expect that towns and cities should be clean, safe, accessible and environmentally attractive. This requires long-term strategic management. The partnerships which are increasingly being developed will help to deliver this.

The Government are committed to the principle of town centre management and the development of partnerships as a key way to regenerate the hearts of our towns and cities. We provide funding to the Association of Town Centre Management to assist it in the development of best practice. This summer we published a survey of good practice, Town Centre Partnerships, which identified the need to develop a common strategy and vision for the future management of the town centre area.

The debate has highlighted one of the problems facing town centre management schemes. It is the universal problem which faces all of us in our everyday life--that of finance. In many cases, primary funding comes from local authorities and a small number of proactive businesses. But this is often committed on a short-term basis and much time and energy are spent harnessing funds for future years. I recognise also the frustrations felt by those making contributions to these schemes at the fact that other businesses within the area may reap the benefits of the scheme and freeload without making the commitment of being a partner in the process.

This is one of the key reasons why the department has part-funded research by the ATCM into the development of town improvement zones. This has looked at the feasibility of developing a voluntary approach which can be fully inclusive of all the partners in the centre. The report and subsequent supplement has just been completed. They recognise that such an approach can be very effective in certain situations and is well worth exploring. However, the problems that can be encountered through free-riders are confirmed. I know that my honourable friend the Minister for the Regions, Regeneration and Planning will ensure that the Government respond to the findings of the research quickly and come forward with proposals.

The noble Lord is fully aware of the problems being encountered by town centre management schemes and in his Bill he adopts an approach that has been much favoured in North America where business improvement districts are a common feature of many downtown areas. However, I think it is vital that we recognise the very different circumstances that exist in the North American context. The traditional centres were badly hit by the development of a mall culture and were extremely slow in fighting back. Also, in many instances, the central business areas of many American towns and cities had suffered tremendously through neglect, and the lack of a co-ordinated approach to positive management. The development of sprawling, air-conditioned malls exacerbated the problem.

In the UK, the introduction of the sequential test as a tool for site selection for town centre uses in Planning Policy Guidance Note 6 will assist the competitiveness of our existing centres. Although there are already a

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number of existing out-of-town centres, PPG6 will help to re-focus development in the existing hearts of our towns and cities.

Another major difference between the UK and North America is the far more proactive role of our local authorities. They have often been the driving force in developing the appropriate partnerships to take action in the locality. They have identified the problems and acted as the catalyst. Indeed, local authorities provide much of the resources for the existing partnerships to which I have referred. This is in contrast to North America where the impetus for BIDs has generally originated in the business community because of dissatisfaction with the functions being carried out by the city authorities.

The key issue raised during the debate is to what extent contributions to management schemes can be made compulsory. This is a difficult and sensitive issue. At this stage the Government have an open mind on the best way forward. We are concerned, however, to ensure that whatever system might be introduced in an area, additional burdens are not compulsorily imposed on small businesses which might already be operating on very tight margins.

The Bill makes provision for a democratic vote on whether a BID should be established. This is helpful, but we need to ensure that any system is able to have the fullest possible support from all the participants. The Government will need to hear strong arguments that a compulsory mechanism, such as that laid down in the Bill, is necessarily the right way to proceed.

As the noble Lord will be aware, the Government are currently undertaking a comprehensive review of the way in which local government is financed. Among other things we are looking at the possibility of giving local authorities some measure of control over setting business rates. In response to detailed questions, we made clear in our manifesto that there would be full consultation before any decision was taken on returning or localising the non-domestic rate. We hope that the consultation paper will be ready before Christmas. We will of course take into account all the comments. I am sure from what the noble Baroness, Lady Hamwee, said that there will be some strong responses. Primary legislation will be required. Were we to pursue it we would have to find the necessary legislative slot.

As part of the review we are looking at changes to strengthen local democracy and to develop local authorities' leadership role. As part of this, we are looking to strengthen authorities' capacity to work in partnership with others--with local business, local voluntary organisations and local people. We hope to publish the consultation papers before Christmas including the potential community partners in such a scheme.

The outcome of the review may change the way in which local authorities operate, and hence the context within which your Lordships will wish to consider the current proposals. In short, it may be premature to proceed down the road of compulsory contributions to town centre management schemes until after we know the future shape of local government and the way it is to be financed. However, I fully appreciate that the

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noble Lord's interest in, and concern for, the health of our town and city centres is a strong one. It is one we share, and I feel that this debate has been invaluable in highlighting the key issues that face businesses, communities and central and local government in maintaining and improving the vitality of our traditional centres.

The Government will listen to the debate in your Lordships' House with interest and, as the Bill makes further progress, they will note with interest the concerns and points raised.

8 p.m.

Lord Bowness: My Lords, there may be some in your Lordships' House who are as puzzled as I am in the process of a learning curve why I find myself speaking in this position in the debate. But, so be it. I am grateful to my noble friend, Lord Jenkin of Roding, for his introduction and explanation of the provisions of the Bill. The concepts of a business improvement district, established by an election, approved by the local authority, supported by a majority and subject to the maxima and exclusions which are set out in the Bill, are something which I believe provide an interesting and important advance on the partnerships which have been established between local government and business throughout the country.

Having said that, I am sure that we will want to discuss, and may even go so far as to welcome, the noble Lord's suggestion that the majority should perhaps be greater than 50 per cent. Used ambitiously, it is interesting, as my noble friend suggested, that a business improvement district could lead to the Business Improvement District Company undertaking some of the services for the local authority, although that must be by agreement and ought not to become a device whereby the important principle of additionality set out in the Bill is thwarted.

I am sure that additionality is a matter which will need careful consideration when we come to examine the detailed provisions of the Bill, especially where capital expenditure is involved. I understand that capital expenditure can be the subject of a bid. Clearly, capital expenditure might be used to accelerate a provision in a particular area which might have come in time as a local authority programme progressed.

The evidence from the United States appears to show that BIDs are very successful. Of course, I accept that it is difficult to read across from one jurisdiction to another. As the discussion on the Bill proceeds through your Lordships' House, I shall be interested to learn how they fared elsewhere in Europe as I understand that the Netherlands and Sweden have similar projects.

As I see it, the advantages of a BID are that we will achieve an improved environment, better security and, as a consequence, better economic health within a district. BIDs are perhaps tailored for the needs of town and city centres. However, I do not believe that they should be disregarded for district centres of urban areas or the centres of small towns and villages. Of course, the emphasis in each will be different from place to

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place and the scale very different. But, as I see it, the great advantage is that those intimately involved with an area can combine to bring about their priorities in their areas. I see it as an advantage that they do not necessarily have to wait to take their turn in what may be a separate and different set of priorities when viewed on a city, borough or district-wide basis.

I do not see anything but an advantage both to the area in particular and also to the greater area of the authority concerned, which then does not have to provide in the particular areas. The noble Lord, Lord Monkswell, expressed concern that the better-off areas would benefit. But clearly it could also be said, subject to the problems of additionality being adequately resolved, that more money will then be available for the less well-off areas within the particular local authority. We are talking about business rate payers, not council tax payers.

Nevertheless, having said that while such BIDs may well be used in smaller areas, it is within the city areas that the greatest benefit will be felt. There is already concern about the decline of city centres. There have been the difficulties of competing with out-of-town centres, as was referred to in tonight's debate. No one is saying that there is no place for out-of-town shopping, subject to a whole range of planning criteria which themselves are probably the subject of a separate debate. But safe, secure town centres, providing a pleasant environment are essential, not only to avoid the problems which flow from decline but because out-of-town city centres do not meet the needs of everyone.

However, the comfort and choice to which the Minister referred is only comfort and choice for some people. It is only if the city centres have the kind of qualities that we all want and which we have heard described tonight, together with the economic base and range of choice of shops and services, that we can stop and reverse the decline. It is then that people will want to live in city centres, so releasing the pressure which we are told has to be placed upon the countryside and the green belt. But to do this the city centres have to operate on a level playing field with those greenfield sites. Legislation such as this proposal, giving such powers, helps provide those level playing fields--

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