Business Rate Supplements Bill

My Lords, I, too, declare an interest. I am leader of Wigan Council and chairman of the Association of Greater Manchester Authorities and I may at some stage seek to implement the provisions of the Bill when it becomes an Act. I, too, welcome the Bill, but I recognise that it is a small step towards improving local government finance and that there is a lot more still to be done. I remind your Lordships that the Bill is necessary. Twenty-one years ago, the infamous Local Government Finance Act 1988 introduced the poll tax and the system of the national business rate. That was a grave mistake because it stopped businesses engaging with local authorities for many years. The noble Lord, Lord Best, complained about what is coming in the future: the 2010 review. All the unwieldiness and the problems of changing the system are down to the 1988 Act. If the CBI wants more understanding of business rates, we can do no better than to have them determined at a local level from day one. The system has also made councils very reliant on a single tax, which these days is the council tax, so it has helped to undermine confidence in that tax. This is a limited Bill, but I welcome the way in which the Government have thought about introducing at least part of the Lyons report and have given local authorities the opportunity to "place-shape", to use the words of Sir Michael Lyons. We want to improve the quality of life in our boroughs and we can do that by working with key stakeholders in the community. Businesses are obviously important. The supplementary business rate will give us the opportunity to achieve these objectives, which I welcome. I recognise that there are major concerns with the Bill. I will not repeat the words of the noble Lord, Lord Best, who preceded me. I am not sure that 2p should be written into the Bill, but I agree with him there should be a process whereby the figure could be reviewed at a certain time. It may go up to 4p in line with the Lyons report. When we reflect on the various communications that we received from organisations, we see that there is a lack of confidence in local authorities among the business community. That is probably more true nationally than locally. It is important that local authorities think about how they can be successful in consulting businesses. I am long in the tooth as a local politician, but as a young chairman of finance I implemented one of the earliest consultations when we had to consult local businesses on the level of rates. We were still able to set the business rate but we had to consult about it. I remember the meetings that we had with the local business communities as meetings of two halves. In the first half, the business community berated me for wanting to spend too much money and therefore putting up the business rates. In the second half of the meeting, it berated me for not spending enough money on its pet projects, which it wanted to see implemented. We have moved a long way from the 1980s and we are in a position to have that communication. In most areas, including my own—both at the local Wigan level and at the wider Manchester level—we have significant partnerships with business. We are talking all the time about issues and trying to work together to improve our local economies. That could be the basis of going forward. The implication seems to be that we are trying to sneak in some kind of local authority schemes and get them funded by business. The message needs to be that these are schemes that local authorities and the business community together believe are important to improve the local area. We should be able to think about making them joint developments rather than seeing them as developments for one side or the other. Local authorities must recognise that they cannot always spend as much money as they may like. I think that, in their recent response to the recession, local authorities of all political persuasions have shown that they understand the way in which these things work. The noble Lord, Lord Bates, started off by announcing his background from the north-east, but then he seemed to want a scheme that would be applicable only to London. I come from Manchester. Why can we not have a scheme in Manchester if there is one in London? Why should this be limited to what London wants? We want an opportunity to bring significant economic improvements to our area. Significantly, we have just done something that no other city region, including London, has done: we had a group of independent economists look at the Manchester economy and tell us face-to-face what needs to be done. A key thing that was identified was that skill levels are not good enough if we want to drive our economy forward. That is accepted by local authorities and by business. Using an appropriate supplementary business rate, we could drive forward a scheme that would really improve the local economy. I was delighted with the part of the Budget today in which the Chancellor announced that the Manchester city region was to be a pilot area for economic improvements. I pay tribute to the work done behind the scenes by my noble friend Lady Andrews and I thank her for her support. I welcome this opportunity, as do local business communities. I spoke earlier today, albeit on another matter, with the chief executive of the Manchester Chamber of Commerce. She said, "We support the Bill, but don’t start it until the economy begins to improve". We can all share those sentiments.