Business Rate Supplements Bill

My Lords, I declare my interests in this debate. I am chief executive of a non-profit-making pressure group, London First, which, with subscriptions from businesses, universities and colleges, pursues its mission to make London the best city in the world in which to do business. I want to make it absolutely clear that I am not a paid advocate for any individual business and that my views are my own. I share the ambitions of the Government’s Department for Business, Enterprise and Regulatory Reform in pursuing an environment in which business can thrive, only I do so with an insight into the immediate hopes, fears, opportunities and challenges facing business leaders. In regard to this Bill, I find myself in the unusual position of supporting higher taxes on both the property and the occupier community, because doing so ultimately promises them and society greater benefits. I apologise for labouring both my interests and my perspective. I do so because this is the first time I have spoken on a Bill in the House since an Opposition spokesman from another place suggested that Members who draw on their professional expertise in this House might somehow be committing an offence. I am grateful that his more considered colleagues in this House have a better understanding of the value that temporal and spiritual experience bring to our proceedings. Now more than ever, this House and this Parliament need to understand how their decisions will impact on the economy and I hope to bring value to the House in this regard. The Bill broadly enables local businesses and local government to come together to fund a central infrastructure for the benefit of all. Given the pressure on public spending for much of the next decade, a mechanism such as the supplementary business rate, empowering local authorities to raise money from businesses in order to invest in the infrastructure they say they need, is a good thing. The question is: how is it to be done? Infrastructure spend brings immediate activity and therefore jobs, as well as building capacity for the long term. This is surely welcome in an economic downturn and provides grist to the mill of Sir Rod Eddington’s report, which was categorical in making the case for infrastructure investment to support the economy. However, we must be conscious that the SBR is but one part of a number of rating challenges facing businesses at the worst possible time in the economic cycle. As the noble Lord, Lord Bates, has described, when rates bills fall onto the desks of finance directors next April, an SBR levy might be accompanied by an uplift in rates and an absence of empty property rate relief, as well as—in London in particular—the sharp effects of revaluation due to the valuation having been taken in April 2008 at the peak of the market. It is a shame that the Chancellor has not taken the opportunity to reintroduce empty property rate relief, the logic for the removal of which has disappeared. However, the Government have indicated that transitional arrangements will be put in place for the revaluation. It is vital that these measures effectively alleviate the strain of the rates burden at this crunch time. For London, the Bill will enable the current mayor to fulfil the commitment of his predecessor in providing part of London’s funding contribution for Crossrail. This is essential London infrastructure that will bring benefits to London and London businesses in excess of the costs, so I strongly support the Bill—though not without reservations. I sympathise with the views of those who feel that there should have been a discrete bill for Crossrail’s funding or who feel that every project should require a ballot so that businesses can be confident that money raised will be appropriately invested, but we are where we are. We desperately need the capacity that Crossrail will provide, and, starting now, it will provide much needed countercyclical investment in London. Nevertheless, as I have mentioned, it is clearly a difficult time to be increasing the financial burden on business. The SBR will be with us for many decades and many economic cycles. Anything that the Mayor of London can do to vary the quantity or the timing of the SBR on its introduction at this economically fragile time will be welcome, and I know that he is considering the extent of flexibility available to him. A further issue, which was touched on earlier, is the way in which the SBR affects businesses in business improvement districts, or BIDs, where occupiers already pay a levy to support local improvement measures. There is a strong case for some offset measure to ensure that businesses contributing to BIDs do not in effect pay double. In London, the mayor has resisted this step, but we have found common ground over reducing the impact by broadening the way that BIDs are funded. It has long been argued by London First, the British Property Federation and others that BIDs should have the power to decide whether or not to include property owners, as well as occupiers, as contributors to their funding. To date, many property owners have contributed voluntarily to BIDs, but other property owners who have not contributed have also benefited from their activities. The Bill represents an opportunity to rectify that imbalance and to help to reduce the immediate burden on occupiers. I hope that government amendments will be brought forward to that end, which will attract wide support. It is always a thorny issue debating the finer points of legislation concerning the structure of taxation. As I mentioned in my opening remarks, I sympathise with a number of the critics of the form of the Bill but, as is so often the case, I fear that the perfect is the enemy of the good. Subject to the observations I have made, this Bill is the good.