Business Rate Supplements Bill

My Lords, I welcome the Bill. I have been involved in Crossrail for a number of years, and the Bill is a way of plugging quite a big financial hole. I shall come back to that. It is a good idea that the Bill is much wider than Crossrail alone. Having read Clause 3, I think it could be used for energy projects, be they wind farms, waste-generating stations or nasty coal-fired power stations—if anyone wanted to do that—or road, rail, airports or ports. As the noble Lord, Lord Bates, said, it could cover centres of excellence too, as well as my noble friend Lord Smith’s skill improvements scheme, so it is to be welcomed. I still worry slightly about who pays and who decides. It will be important for businesses to be balloted. Taking into account the whole of the Greater London area, some businesses will think that it is a very good idea to have something while others will ask what good it does them. I will come back to that. On a more general principle, in the past decade or two we have seen people who live where transport links have been suddenly improved, be they rail or road, enjoying pretty enormous capital gains on their properties. I know that it is politically unacceptable to change anything to do with domestic valuation or rates, but some businesses might ask why they should pay while residents do not. It is good that small businesses will be exempt. I do not have much of a view on the 2p maximum, except when we look at the example of Crossrail. As many noble Lords have said, it is an essential element of the project funding. It is under the 30 per cent but it is still quite high. If a project such as Crossrail is being promoted through a hybrid Bill, the Standing Orders say that a financing plan which is credible or definite has to be in place before the Bill even starts its passage through either House. Some of us might have questioned whether that was the case regarding the BRS. Even though it may have been in the plan, there was no legislation at the time to allow it to be raised. However, the Crossrail Bill received Royal Assent and we are all wondering what will happen next. Clearly this will plug the gap. Whether it is essential to the funding of Crossrail, we can debate. The Treasury could always find more money if it wanted to, even now, or it could ask local business ratepayers to do it instead. This is what is in the plan and I shall not question it very much. What worries me comes out of the briefing from Transport for London and the Mayor of London about the economic benefits of Crossrail, which many noble Lords have probably received. There are lots of maps. The mayor is trying to show that even though Crossrail goes east-west, there are just as many benefits at the north and south of London as there are at the east and west. I find it difficult to accept that those who own a large business at the top end of the Northern line will benefit in the same way as those who own a large business in Paddington or Southall, for example, which are on the new line. It is extraordinary. I wondered how the GLA would organise this but it is clear from the example in the briefing that it is expecting the various contributions to be between £150 million and £200 million each year if the levy is set at 2p in the pound of rateable value for properties over £50,000. That clearly covers the whole of the Greater London area, so it looks to me as if there will be 2p on every business within the Greater London area. I may have got this wrong but I have seen nothing in the Bill to allow the authority to charge different amounts in different areas. If that is the case, perhaps my noble friend can explain how this would work. I cannot imagine many businesses from the north and the south voting for it. It could be that because the proportion of finance for the project is less than 30 per cent, there will not be a ballot, but that would be even more difficult and extremely divisive. There are an awful lot of questions to be answered here, particularly in relation to Crossrail. It could happen equally in places such as Manchester. For example, the noble Lord, Lord Smith, might want to see the tram extended where it would benefit; some businesses might want to contribute but others might say, "Why should we?" Individual boroughs in London might get together and those on the east-west route might say, "Let’s club together and do it on these routes". The ones a little further out might do a bit less and it might be difficult getting agreement from all the boroughs but, to me, it would seem a great deal more equitable. I worry about this aspect of Crossrail. I still cannot understand how the sum of 2p, even if it is raised over the whole Greater London area, will achieve the £3.5 billion that is clearly needed. To conclude with something that is relevant to Crossrail, in particular, I have been involved over the years with the Channel Tunnel—building the tunnel and the rail link. I have also been involved in Crossrail, and I declare an interest as chairman of the Rail Freight Group. I am not talking about freight now, but I have been involved in it. I have found when a project is being developed that there is a need for much consultation—and many noble Lords have mentioned that. What has happened up to now with Crossrail is that the Minister responsible, who has normally been the Minister responsible for railways or transport in general, has chaired a stakeholder group with local authority groups, meeting once every six months or so. The parties involved will go through issues, which could include issues like this—technical issues and other things. On the Channel Tunnel, the Department of Transport led the process, with the Department of the Environment and some planning input as well. There now seems to be a bit of a hiatus; the Bill has Royal Assent, the staff are all changing at Crossrail and Ministers are not going ahead with meetings. It might be an idea if Ministers considered restarting some of those meetings with stakeholders and local authorities and the three departments or ministries concerned, so that all the stakeholders involved can get an overview of what is happening and explain any concerns that they have. It makes a great difference having a Minister there who is prepared to listen and answer questions. On the whole, projects go much more smoothly when that happens. In conclusion, I very much welcome the Bill. There are a few changes that could be made, which may be beneficial. More than that, I will be pleased to hear from my noble friend how the issue of how much different businesses might be charged in different areas, depending on the benefit they receive, could be dealt with. That is one of my main worries.