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Lord Rooker: That is right on one half of the formula. The other half of the formula is that the majority of those voting are in favour. On what the noble Baroness says, there will be many more small businesses than large ones. The big ones will be small in number but huge in size. The small businesses will be large in number but small in size.

The first part of the dual key is that the majority of those voting have to be in favour; therefore, the small businesses have the dual key to balance the high

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rateable value. In other words, there is a protection. If all the small businesses were against it, the chances are that there would be more votes by individuals against it than there would be votes in favour by the big boys. That is where the dual key comes in. The noble Baroness is right in what she says on one half of the formula, but that is balanced by the dual key in the other half. The votes of the small businesses with low rateable values count individually on a first-past-the-formula basis. In effect, they have to support the scheme anyway; if they do not they can stop it.

Baroness Hanham: I knew I should sit down and that I was wasting my time. I thank the Minister for that explanation. I shall leave this matter for this afternoon and leave my noble friend to deal with his amendments. I may return to the matter in the future.

Lord Jenkin of Roding: I have listened with interest and with not too much surprise, but with some disappointment to the general thrust of the Minister's argument. I shall turn in a moment to the matter of taxation as I have been looking at an interesting study and discussing this with officials of the ONS.

My first point is that the Minister and the Government underestimate the degree of support that there is for adding owners—lessors—to the statutory part of the scheme so that they do not just come in under Clause 45 as "any other person". It is a fairly small peg on which to hang what may be very large contributions to BID. I was going to say "my noble friend", but my co-president of the Association of London Government, the noble Lord, Lord Graham of Edmonton, who has now left, quoted from a paper from the British Retail Consortium which I also have. I mentioned ATCM, the British Council for Offices, the Property Federation, the Retail Consortium, the Corporation of London, the London Borough of Lambeth and the Westminster City Council. Those local authorities have joined in supporting the amendment. I believe that the Minister greatly exaggerates the problems that would exist for local authorities if they came in.

I do not believe that anyone would quarrel with the cost of compiling the property register for the purposes of a BID, but the cost would clearly have to come out of the proceeds of the levy. I do not see why the general body of council tax payers should bear that. It must be part of the cost of setting up. I mentioned Section 16 of the Local Government (Miscellaneous Provisions) Act 1976. That has been on the statute book for over a quarter of a century. It states:

    "Where, with a view to performing a function conferred on a local authority by any enactment"—

clearly this would be such a provision—

    "the authority considers that it ought to have information connected with any land, the authority may serve on one or more of the following persons, namely—

    "(a) the occupier of the land; and

    "(b) any person who has an interest in the land either as freeholder, mortgagee or lessee or who directly or indirectly receives rent for the land; and

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    "(c) any person who, in pursuance of an agreement between himself and a person interested in the land, is authorised to manage the land".

Local authorities have been using those powers for a quarter of a century without stirring up the kind of hornets' nest that the Minister has suggested, no doubt on advice, would be the problem for local authorities in doing this. They have the power to look behind the ratepayers. There is no suggestion that the exercise of the powers of Section 16 of the Local Government (Miscellaneous Provisions) Act has given rise to anything approaching the difficulties on which he has laid such emphasis. I hope that he may be prepared to talk to some local authorities that support the amendments to see whether they would regard the issue as such an insupportable burden and one that they would find intolerable.

On the basis of advice, I quoted an outside figure of 50,000 for a substantial BID to compile the property register. That would be against the 1 million that would be raised by the levy in that BID, which suggests it is a relatively modest cost. It would be a one-off cost. I understand it would not have to be kept up to date. I honestly believe that the Minister's department is substantially exaggerating the problem that would be imposed by bringing property owners in under that head.

On whether it is a tax, perhaps I can go back a little. This matter was raised in relation to my Bill in 1998 when the noble Baroness, Lady Farrington of Ribbleton, who was performing the same function in responding to my Bill, said:

    "It is clear that under the provisions of the Bill"—

my Bill—

    "businesses in an area will have to pay a certain amount if there has been a local vote to that effect. Although individual businesses will have the opportunity to vote, they will not have a choice on payment of the charge if the decision is taken to implement the draft scheme. As I am sure the Committee will recognise, this is exactly analogous to the taxation system in any democratic country. We can influence the level of income tax via the ballot, but there is no choice on whether or not to pay. This is, by definition, a tax and spending of the income received would count as public expenditure".—[Official Report, 27/2/98; col. 887.]

The noble Baroness went on to quote Section 2.68 of the European System of Accounts as used by the Office for National Statistics to make it clear that it would be public expenditure. The discussions that I have had this morning suggest that, whether or not this is a tax, Section 2.68 of the ESA does not have anything to do with it. Whether or not it is a tax comes under a completely different section of the ESA. Section 4.14 deals with taxes on production and imports. There is then a reference that I do not understand, "D.2". It says that taxes on production and imports consist of compulsory unrequited payments in cash or in kind. I ask what "unrequited" means. Interestingly it means what the Minister suggested: that one pays into a pool but it does not necessarily mean that one receives as much out of the pool as one puts in. That is the purpose.

I put this question: if there is, unusually, a BID with one participant, who has a big industrial estate like Park Royal, who pays into the pool for the benefit of

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extra security around the premises, that is fully requited because the entire benefit accrues to the person paying the levy. But if there are two people, the benefit cannot be apportioned between the two, so it becomes a tax. In the first case it is a charge and in the second it is a tax. I find that a very strange argument indeed.

Before the noble Lord entered the House of Commons, we were arguing about the selective employment tax. There was an argument about dental assistants. The noble Lord, Lord Hattersley, who was then a parliamentary under-secretary in the Department of Employment, argued that if a dentist had one dental assistant there was no selective employment tax, but if he had two there was. The noble Lord, Lord Hattersley, had sufficient grace to recognise that that was an untenable position and he withdrew the regulations. They were brought back in a different form. We have the same situation here. If there is one property it is a charge and if there are two it becomes a tax.

In a sense this is becoming a meaningless argument. Five years ago I believe that the noble Baroness, Lady Farrington, was trying to tell me—then we were mostly referring to the occupier as most of that Bill concerned non-domestic ratepayers—that it was a tax. The noble Lord, Lord Rooker, has confirmed that this afternoon. I believe that the noble Baroness referred to the wrong section in the ESA, but she is not here to defend herself. Then it was a tax on the occupiers.

The noble Lord, Lord Rooker, has confirmed that this is a tax on occupiers. I rang the Public Bill Office in another place to find out what the supporting money resolutions were that support the new tax in Part 4 of the Bill. I was referred to a money resolution. It was agreed that,

    "for the purposes of any Act resulting from the Local Government Bill, it is expedient to authorise . . . the payment out of money provided by Parliament of any expenditure under the Act of a Minister of the Crown".

That clearly is not the case. The resolution continues by referring to,

    "any increase attributable to the Act in the sums which under any other enactment are payable out of money so provided; and . . . the payment out of the Consolidated Fund of any increase attributable to the Act in the sums which under any other enactment are payable out of that Fund".

Clearly that does not have anything to do with the BID levy.

A ways and means resolution was passed at the same time with a majority of 264 votes against 22. Members of the Committee should bear in mind that it was after 10 o'clock at night. It stated that,

    "for the purposes of any Act resulting from the Local Government Bill, it is expedient to authorise the payment into the Consolidated Fund of . . . any sums received under the Act by a Minister of the Crown . . . any increase attributable to the Act in the sums payable into that Fund under any other enactment; and . . . any sums received by a valuation officer by way of penalty".—[Official Report, Commons, 7/1/03; col. 139.]

None of those conditions refers to the levy.

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If we have a tax, why do we not have a necessary resolution to support it? I suspect that the answer is that there are two different kinds of taxes. First, there is the kind that the Treasury raises. I was Financial Secretary for a number of years. One has to have the necessary money resolution to support the Finance Bill, which is then a money Bill. Then there is what for some other reason is described as a tax. I see that the noble Lord, Lord Rooker, has got his explanation from the wizard behind him, that such taxes do not require a specific resolution. My riposte to that is that if that is right for occupiers, why can it not be equally right for owners? Then one is thrown back on the other argument—is it so horribly difficult to take the action to bring the owners in that one cannot contemplate it?

That brings me to the noble Lord's third point. He is prepared to contemplate that action. What was his phrase? I scribbled it down. He said that if a sufficient number of BIDs were up and running, the Government would be prepared to review the BIDs. One is grateful for that small mercy; that makes about 99 per cent bad news and 1 per cent slightly less bad news. I take what the noble Lord said entirely seriously and as entirely genuine—that it is not merely dust thrown into the face of the Committee and that it will happen; I trust him.

If in the light of the experience of the BIDs, and the warnings given about the opportunity of catching the freeloaders among the freeholders and owners—they are turning out to be rather short-term and lacking imagination and real substance—the Minister may be prepared to reconsider the question—he would be prepared to find a mechanism for bringing owners into the system rather than using a provision hung on a subsection about "any other person".

The Minister has made a great many arguments. We will certainly want to look very carefully at what he said about the drafting of some of the amendments. I hope that he will agree that his officials could have another meeting when parties outside have had the opportunity to study the Hansard report of the arguments of Members of the Committee. I too had a note of the meeting with Mr Raynsford and officials. One question that will be asked is about the fact that it was said on that occasion to the British Property Federation, "It is a tax because the Treasury says that it is a tax". We need a written statement from the Treasury setting out exactly why it makes that argument.

The Minister laid huge emphasis—coming back to it again and again—on the fact that there would be a new tax on property owners and—surprise, surprise—some of them seemed willing to pay it. Then he said something about the Tory government, which I am not sure that I heard correctly being a rather deaf old man. The argument obviously weighs heavily with Ministers. However, we have a long list of representative bodies that recognise the advantages of BIDs—which the Government have recognised—the role of property owners—the Minister's department has spelled it out in the guidance—and that the provision could perfectly well be used.

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In the end, we come to what the Minister said was not a threat—that if the amendment or anything like it were made on Report or on Third Reading, the Government would, in another place, simply remove the entire part of the Bill. I find that quite a distasteful way to legislate. We are only in June. By the time that we have reached that stage, most of the rest of the Bill—the new financial system that my noble friends have debated and will continue to debate at some length—will be pretty well settled. Then there was the threat that we might have an extra two or three weeks deciding whether we are to add owners into BIDs. The Minister shakes his head. He said that it positively was not a threat, but it sounded remarkably like one to me. If we want to exercise our right to vote an amendment in at some later stage, it is a threat to say, "My God—look what's going to happen".

I hope that the Minister will reflect on the matters before later stages of the Bill. I hope that he will agree that his officials could have a detailed meeting on the drafting of the amendments. After all, he would have to have a new Bill, so perhaps we could include at some stage a power to extend Part 4 to owners by statutory instrument. I am merely suggesting the possibilities, all under the rubric that he said that, if there were a sufficient number of BIDs in operation at the time of the review, it would be proper for the Government to reconsider the line that they were taking.

If the Government did so, we might be able to get a lot further over that line and not trip over the Minister's tripwire. What worries me is that the provisions may have more to do with Section 28 than anything else. We might be able to make a good deal more progress at a later stage. In his response to my remarks, I hope that the Minister will agree that we can continue discussions on the matter with the representative bodies, to see whether we can provide a scheme that would overcome some of the hurdles, many of which have been exaggerated, as the Minister identified.

There is clearly a great desire outside the House that the owners should be in the scheme. I have talked to a lot of people in the past few days, and they find it extremely difficult to see why there is such resistance from the Minister's department to that happening. The problem is not the practical difficulties. We have ratepayers and non-domestic ratepayers, and we are being asked why cannot we be satisfied with that. We are not satisfied with that. We think that owners should be statutorily involved in the process and come in with the voting system, and we do not have that at the moment.

5 p.m.

Lord Rooker: I shall respond briefly to the noble Lord. He made a point about the money resolution. I am pleased to announce that the piece of paper that I was passed only repeated what I said. Non-domestic rates are a tax. The levy is a tax on the occupiers. Because it is an existing tax on existing occupiers, there is no reference to it in the money resolution or the ways

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and means resolution. If it were extended in the Bill, certainly to property owners, it would require a reference in the money resolution.

When the BID levy is paid by occupiers, it is a tax, but they already pay the rates, so it is not a new tax on that group of people. That is the point, and I made it. It would be a new tax on a different set of people for a different purpose if it were on the property owners. I made a caveat towards the end of my remarks that, while we did not have any ideological reasons, there may have been what was in part a political reason not to introduce a new tax. However, the main thrust of our argument was the practicality, not the politics.

I want to make a point about my so-called threat. The Bill cannot wait. It cannot spill over the end of the Summer Recess without Royal Assent. Everyone understands that or, if they do not, they have to from now on. It is no secret. If the new system of local government finance implicit in the first two parts of the Bill is to come into force next year, as all parties in local government wish to happen, we cannot wait for Royal Assent until October. The Bill needs Royal Assent in July, or in the two weeks in September when the new parliamentary timetable ensures that both Houses sit. It is a small amount of time.

I assure Members of the Committee that the problem is not really to do with the Bill, but the rest of the programme. If the Bill is affected by ping-pong, there is no time to bring it back. That is the problem with this unreconstructed and unreformed Chamber. Another place has reformed itself and sends legislation down on a conveyor belt, a lot of it not scrutinised properly.

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