Business Rate Supplements Bill

I am grateful to the hon. Gentleman for setting out his position once again. Having made those points in a general debate on Second Reading, he could have aired them again and had them resolved in Committee. If he had made it clear that that was his party’s intention, we would not have been forced into an either/or argument on some extremely complex issues. The Minister will no doubt understand that our support at this stage is not equivalent to a blank cheque to support the Bill. We will have many concerns to raise as the discussion moves on. Outside London, eyes will be focused on the Bill’s slight reform of the business rate, which is important for the businesses that will be directly affected. As we heard from other hon. Members, the organisations that represent those businesses have been keen to point out that big risks are involved. Their fundamental argument is that there should be no taxation without representation. It was good to have an insight into the Christmas viewing of the hon. Member for Bromley and Chislehurst. We share that principle. I am a little concerned that in the Government’s responses so far, they seem to be saying that although the process works effectively for bids, with the double-lock vote and so on, and the opportunity for businesses to be consulted, to have the final say and to be involved in what goes on from there, there is not the same safeguard in much larger and more important schemes. That is a problem. The Liberal Democrats believe that the Bill is a missed opportunity to reform local taxation altogether and radically shift the balance of funds raised and spent locally; it could have been the first step away from the Britain that is the most centralised country in Europe outside Malta. The Lyons inquiry has already been debated in the House many times. It has said that a significant increase in the proportion of expenditure raised locally would assist in the revitalisation of local democracy and its strategic role. That may hint that the principle might be acceptable in certain circumstances, but it does not concede the wider point that local authorities could be trusted to be more involved in raising money locally and justifying the expenditure to the local community, businesses and electorate. The Government should have had that fundamental aim in drafting the Bill. That would have allowed them to look at the Crossrail issues and the reform would have been wider, which many would have welcomed. There is a real danger that the Bill will set back the positive relationships between businesses and local authorities, which, as we have heard, have been moving forward and delivering through bids and other mechanisms in their areas. That is a real concern. Why concede the principle of locally collected business rates without allowing local authorities to engage fully in that practice? A useful change adopted by the House has been the hearing of evidence first hand from a wide range of organisations at Public Bill Committees. No doubt our Public Bill Committee will hear from those who think that the Bill is a positive step and those who are far more concerned about it. Clearly, businesses are ready to engage with some proposals of this kind, but they rightly want firm safeguards so that concerns about an ever-increasing taxation burden, at a time when even slightly increased overheads could mean the difference between bankruptcy and insolvency, can be addressed and the voices can be heard. The Prime Minister himself has instructed Her Majesty’s Revenue and Customs, for example, to do all it can to support businesses going through short-term difficulty. It would be against that trend if proposals such as these could be imposed on businesses in the local community without their having had the chance for a final say and for thoroughly opting into the process. We have heard a great deal about business improvement districts as an idea of how such a principle could work. It was instructive to me, as a relatively new Member, to hear that the Minister was instrumental in bringing them in; I am sure that he will want to explore that if he joins us in Committee. What the BID mechanism tries to provide is very different; there are some key local renewal projects to encourage investment. However, the fundamental point is how businesses can be consulted and reassured that they are not simply a cash cow, but very much part of the process of coming up with a vision—and not only funding it, but delivering it and ensuring that it is realised. BID approval requires a majority of the liable ratepayers and that the aggregate of rateable values voting in favour exceeds those voting against; that is the double-lock system to which the Minister referred. Such a provision is in the Bill for certain circumstances—when more than a third of the eventual project is to be funded through the mechanism. That provision is there, but my concern and that of businesses is that it is not there in all cases. Clearly, if the Bill is enacted, that will be a problem for many people. BIDs can choose to exclude certain businesses from paying the levy; the Minister has said that he may envisage parts of an area being targeted for funds. Those are the sorts of questions that people will have. There is a fear that the measure could be an overall levy, on top of the existing business rates structure, to fund projects that a local authority might have wanted to fund for some time, but lacked the money to do so. I appreciate that in some cases it is difficult to demonstrate additionality. However, it is crucial that businesses have confidence that in any system such as this the principle of additionality will apply. A similar point came up in the debates between the Minister, the hon. Member for Bromley and Chislehurst (Robert Neill) and I, during the Planning Bill, about the infrastructure levy and how it would work. Such measures must be designed to provide something and enable development and genuine economic benefit. Will the Minister reconsider the question of a ballot and return to it later to meet the concerns shared by many hon. Members—that circumstances are likely to occur in which a local authority imposes the measure without there having been a ballot? That is the business community’s fundamental and major concern, and a change on that issue could go a long way towards allaying people’s concerns about the Bill. There is much to be said for how local government structures work in other parts of the world in raising money, engaging with electorates and ensuring that there is collective support for measures. In the United States, for example, there are ballots when major infrastructures are to be funded through whatever mechanism is appropriate in the state and a local authority is allowed to pursue. We should move towards such a process, in which the business community and local residents have far more of a say in opting to support major infrastructure projects that could put a significant financial burden on the local authority and the business community. Under the United States system, the powers available to local authorities are very different and they vary in different states. However, we should aspire to provide that sort of example; that would go far further than the measures outlined by the Minister to engage people and ensure that everybody has a say in the financial commitments for a community and in delivering the community’s wishes for its future. As I said, the Bill raises questions about how the rateable value system works. Last week, I met representatives of St. Austell Brewery in my constituency to talk about the problems that the company’s pubs are experiencing. They were keen to get across to me the fact that the smoking ban and changes in people’s spending behaviour because of changes in the economy mean that the rateable value of some of their pubs will be affected. The system is very slow to catch up with that. The problem is that businesses are dealt with at a certain rateable value, and it takes a long time for them to get across the message that their business has changed fundamentally and that the premises have a different value. Businesses would have welcomed more exploration of such questions in any Bill on business rates. As we have heard, next year the rateable value formula will be reviewed. There are concerns that although the threshold is set at £50,000 at the moment—although that is not in the Bill—that may well change in future and many other businesses may be drawn in. That does nothing to allay the fears of those outside who see the Bill as potentially dangerous or negative. The Government’s ability to see the economic future has been drastically called into question in recent months. We could see Government Ministers in the role of Michael Fish, who said in 1987 that everything was going to be fine—and then the hurricane struck. All of a sudden we find ourselves in the worst economic circumstances for decades, if not centuries. There is a need for greater clarity in the Bill. Clause 6, which deals with the consultation process, has little detail about how consultation with business will be conducted. Having said that we favour a ballot system were the Bill to be enacted, I should say that consultation will need to be undertaken extensively prior to that to ensure that there is real debate. We want to hear more about how such consultation should take place and how businesses can have confidence that their voices will be heard. Given that local authorities will also be contributing to these schemes, that also applies to how the debate will be conducted locally for local residents and other organisations in the voluntary sector and so on. The impact assessment that accompanies the Bill states that assurance will be provided by internal safeguards as well as via external audits undertaken by the Audit Commission. However, inevitably, there will be concerns about consultation. We heard about a specific London-based example regarding the congestion charge. On a national scale, the recent programme of post office closures is another example of consultation. Many communities were given the opportunity to be consulted, but all the evidence that they presented in those consultations came to nothing, and in the end valuable local institutions were lost. That devalued concept of consultation needs to be addressed—the problem is not insurmountable. If there is to be consultation, it must be genuine and there must be a much clearer vision of how it is to be conducted. We will explore many of those issues in Committee, so it is a shame that the Conservatives have chosen to take an all-or-nothing view at this stage. However, the House seems to be more or less unanimously in agreement that we should not put Crossrail in jeopardy. That is why the Bill, although it needs to be improved drastically, as I hope will happen during its passage, deserves a Second Reading. We have been waiting 18 years for Crossrail. I saw somewhere on a website that we have been waiting for it since Brunel’s time, so we can go even further back. That is a name that resonates with me as I come up here on the Great Western line.