Business Rate Supplements Bill

Well, my Lords, I have debated it in public a number of times with Mayor Livingstone. But perhaps I had better not be diverted. Let me say a word about Crossrail. It has perhaps achieved the status of a holy grail or panacea—I do not know which. I hope it will achieve everything that is claimed for it. I do not oppose Crossrail, but it is a pity that our transport thinking has not moved on. I have been struck by the benefits of Crossrail, as described, for parts of London which are not on the route. Those benefits really amount to better jobs in central London to which outer London residents can travel. It is important to be clear about the benefits for Crossrail and for any other project involving the BRS. If those benefits are not spelt out clearly and debated robustly, consultation on a project will be a sham. It is important, too, that if the BRS is used in different parts of the country, there is some consistency in the way in which the benefits are assessed. From these Benches we support the Bill, which is not surprising because we support autonomy, flexibility and discretion for local authorities. I have been quite tempted to ditch my notes and instead respond to a great deal of what the noble Lord, Lord Bates, said. However, I shall leave most of that to my noble friend Lord Tope and simply say that the noble Lord’s speech demonstrated to me, as his colleagues’ speeches have done in the past, the difference in the views which our respective parties take of the role of taxation. The LGA does not want to use the term which both speakers so far have used and which I wrote down—"toolkit". The LGA recently published a list of terms which it thinks we should not use and which it says are jargon. It says that the synonym for toolkit is "guidance". That puzzles me a bit. The LGA does not like the word "mechanisms" either, so I cannot use that for the business rate supplement. I shall just say that raising the supplementary rate can be very useful. The current focus on the economy should not distract us from considering whether the power should be limited to projects which will promote economic development. I should put on the record that that does not mean that I do not agree about the concept of additionality. It is important that the power is used for additional projects. However, in 2035—or, I hope, much sooner—there may be a wish that local businesses share with their local authorities to undertake business projects with other objectives, and it would be a pity if primary legislation were required to allow that to happen. The Minister talked about flexibility, and this is a bit more flexibility that I would like to see in the Bill. There would obviously be safeguards in making every business rate supplement subject to a ballot and of course in the question of whether the local authority can gather together all the necessary funding. It will probably be important to hold on to the picture of how any project is financed in the whole, because the business rate supplement will be a very important part—possibly the catalyst—for something much bigger. I think that describing a business vote on a ballot as a business veto, as was done in the Commons, is rather offensive to business because it implies that businesses are always negative and unconstructive. The local authority, central government and private sector funders can say no to funding the project in question, so why not the majority of businesses? I accept that Crossrail is different—it has been debated at length and in detail, including in legislation, before reaching this stage. It is not surprising that the business sector has a concern. It is facing a plethora of charges. One has to be quite an anorak to fathom out the differences between the criteria for the different charges which might be applied to business. I shall not go into the use of the community infrastructure levy as against this rate, and so on. I simply observe that the workplace parking levy must be the subject of very much wider debate than I had realised, given that it is so often mentioned in the material that has come our way. I am concerned that the BRS might exacerbate the confusion in many people’s minds about which sphere of government receives normal rates given the way in which national rates are collected locally. The British Retail Consortium says that the issue is that it is a property-based contribution, but even from these Benches we would not realistically expect the Government to countenance direct taxation by local authorities. We will pay attention to the prospectus in our discussions. It will require a lot of preparation, which will be a good thing because that should in itself be a form of consultation. It will need to deal not just with a decision in principle but with how the project is to be delivered. The Bill is silent on delivery and, as we have discussed before, project management is not a skill that is in wide supply. Local authorities will have to be very serious about proposals. They will not incur the preparation costs lightly. As I said, I am one of the joint presidents of London Councils. I am glad to see the noble Lord, Lord Graham of Edmonton, in his place. London Councils is seeking commitments from the Government that, as billing authorities, the London boroughs will be able to recoup the additional costs of administering, collecting and enforcing the BRS on behalf of the Greater London Authority. They will incur set-up costs now. They will also bear the costs of modifications to software systems, leading the way for local authorities which may wish to set up a BRS in the future. The London boroughs should be able to recoup the costs they incur from the consultation process, which should be fully funded by the levying authority. They have made it clear to me that while they support the construction of Crossrail, they are disappointed that they will not be able to levy a local BRS for local priorities. They are keen that the Government should undertake to review the operation of the BRS in London in the future. It has to be said that the London boroughs are as big as many of the authorities that will qualify as levying authorities. It is also particularly urgent that consultation on secondary legislation and powers is published as soon as possible. Much of the detail on how the boroughs will have to administer the rate will be covered in secondary legislation and in regulations. The time becomes shorter and shorter for them to assess and react to these. It would be much the best thing if that exercise could stop while the Bill is undergoing its legislative stages. If the use of the BRS is to evolve it is necessary that the Bill itself permits evolution. I have no doubt that the noble Lord, Lord Best, will explain the Local Government Association’s views. I am sure that he will not agree with all that I am saying, particularly with regard to ballots, but we all agree that there should be a statutory commitment to consultation. By that I mean consultation with both local authorities and the business sector on whether the 2p limit will always be the appropriate one. The LGA tells us that 2p would raise about 5 per cent of the total raised by the main business rate. I assume that the association has worked that out on the basis of all the local authorities applying it. The type of projects may evolve. I came to the Bill thinking mainly about capital projects, but even with capital projects, the prospectus must address the revenue costs; but there could be revenue projects. I am intrigued as to how that might work. Reference has been made to business improvement districts. BIDs are often—perhaps even usually—revenue projects. Clearly, we will have to debate the relationship between the BRS, BIDs, and—to the extent possible within the scope of the Bill, which is quite limited—the contribution by property owners as well as occupiers to BIDs. As I said, we will support the Bill. I hope that we can make improvements to it and I hope that if we are successful in doing so, that will be considered in a reflective manner by the House of Commons. The problems on the issue of financial privilege became very stark during the progress of the Planning Bill last year. The Minister says that the Bill reaches us in pristine condition. The House of Commons ran out of time, so I am not sure that her claim is as strong as she presented it. Without wishing to tread on toes, I make a plea that if we make changes, they are not knocked back simply because it came to us in its original state. Even an improved Bill will not answer the charge, on which point I will end, that local taxation is in need of wider reform than this useful, but quite narrow Bill.