Business Rate Supplements Bill

My Lords, this has been a useful, interesting and on the whole positive debate, which we from these Benches welcome. We particularly welcome the contribution from the noble Baroness, Lady Valentine, not just for what she had to say but for the important role that she and London First have played for a number of years and continue to play in helping business and local government to speak together, better to understand where each is coming from and going to. That is a crucial role and we welcome it. I also look forward to the Minister’s replies to the questions that the noble Lord, Lord Berkeley, asked about Crossrail; some of them have interested me, too, coming as I do from a London borough. I was grateful to my noble friend for saying that she would leave it to me to respond to the noble Lord, Lord Bates, speaking from the Conservative Front Bench. I could do so at great length, but I shall resist that temptation, not least because I think that we will be discussing these matters at each stage of the Bill. The points on which we agree—and there were some—will become clear, just as our different approach will become clear. One comment that I would make on the noble Lord’s speech in general is that he painted an alarmist view of the dreadful things that local government would do once it was armed with this power to levy additional tax on poor, long-suffering businesses. I sat here thinking, "Does he know something that I don’t?". The majority of local authorities that will have this power are currently Conservative-controlled and I am sure that he will expect even more of them to be Conservative-controlled by the time the Bill is enacted. Therefore, I worry that he knows something that I do not know and that the effects of the Bill will be far more damaging than the Minister will suggest or, indeed, than I believe they will be. Before I go further, I should declare my own interest again, as this is the start of the process on the Bill. I am a member of the council in the London Borough of Sutton; indeed, I am a member of the executive. It is not quite an interest, but at the time of the 1988 Act to which the noble Lord, Lord Smith of Leigh, referred, I was leader of the council. I remember well the Conservative Government nationalising the business rate. What I remember best is our first statutory consultation meeting with the business rate payers after the Act was enacted. We had always had consultation meetings with business rate payers before the business rate was set, as I imagine most local authorities did. We told them why it was necessary to be whatever it was; they told us why it was too much and we then had a general discussion on what the council was and should be doing. At the first statutory meeting—the ratepayers were not required to attend, but they did—I explained to them first that the council no longer set the business rate. I said that, although the council would continue to collect it, it would not keep their money and that the amount that we got when it was redistributed from the national pool would bear no relation whatever to what they had contributed—nor, indeed, would there be any great benefits directly from any increase in the business rate. They looked at me and asked, "What is the point in having the consultation?". It was rather bizarre that we were statutorily required for the first time to have a consultation on something over which evidently we had no power at all. The noble Lord, Lord Smith of Leigh, is right to refer to the damage that that part of the Act did. What he forgot to say is that the Labour Party, committed at that time to denationalisation of the business rate, has now been in power for 12 years and has done absolutely nothing about it. Indeed, I regret very much that through those 12 years, and even now, the Government, like their predecessor, have failed completely to tackle the whole thorny issue—and it is a thorny issue—of local taxation generally, of which this is an important part. In arguing for the return of the business rate, I would not wish to be thought to be saying that it is necessarily the best form of business taxation at a local level, but it is what we have now. I declared my interest as a councillor for a London borough that is just about the most distant one from Crossrail. Perhaps I may say, therefore, that my commitment and my party’s commitment to Crossrail, and now to this method of helping to fund it, is absolute; I have no qualification whatever to make about that. However, I know that many of the local businesses in the London Borough of Sutton—I suspect that this might be so in other outer London boroughs north and south, too—will not be consulted or have a vote on it. Personally, I do not think that that should be the case. I suspect that, if they were asked, they would be a little cynical about the suggested £13 million of benefits that will come to the borough in 2026. If asked, they might say that they saw the economic benefits from extending the Croydon Tramlink into our borough being of much more immediate and direct benefit than Crossrail. I say that by way of comment, not in any way to reduce my commitment or my council’s commitment to the funding of Crossrail. It is vital that that goes ahead. I certainly would not want to do anything that might damage that funding. I understand why the current Mayor of London opposes extending this power to London boroughs, as he is fearful that, among other things, this funding might be damaged. In any event, this is not the right time for London boroughs to be imposing a further supplementary rate on top of the GLA supplementary rate, which we know will come, and the other measures that have been referred to. However, as several speakers including my noble friend have said, we are talking about the period up to 2035. We all hope that the economic downturn will "upturn" some time before 2035. Some of us still have a faint hope that, at some time before 2035, some Government will be brave enough to reform local taxation generally. But I have always been an idealist. Maybe it will happen, maybe it will not. In introducing the Bill, the Minister rightly said that the power will be there when the time is right. The time must become right at some stage before 2035 for London boroughs. The object of this, which I wholly support, is to improve local economic development. London borough councils working in partnerships with their businesses—that is enormously important—are the drivers of local economic improvement. As my noble friend said, all London boroughs, some more than others, are major players in the local area. They are not the local parish council. Surely there is a case for them, too, to have the power, with proper qualification, to levy a supplementary business rate when the time is right, which I readily accept is not in the immediate future. Unless that is in the Act, however, it will never be there if and when the time ever becomes right. If and when local businesses, councils and people are all in agreement on the use of a supplementary businesses rate to help to fund a particularly important project that benefits all, they will be unable to do so unless that power is there. I regret that. I referred to partnership, which is the key to the Bill. Times have changed beyond recognition from the situation in the 1980s that perhaps led to the nationalisation of the business rate. I remember well that, even in my own council, in those days business did not understand local government and much of local government did not understand business. We did not understand why we behaved and worked as we did, and many had not realised that we very much shared common interests. That situation has changed pretty well everywhere in the country; certainly, it has long since changed in all good areas. Any good local authority will be working in partnership with its business community. I am therefore a little sorry to see that the briefings for the Bill have become, in a way, a little polarised. We have the Local Government Association on the one hand saying, "No ballots! We must not have a ballot", and the CBI and the business community saying on the other hand, "We must have a ballot". I hope that we can make this debate a little less polarised. A ballot, whether it is statutorily required or not, will come at the end of a process. It will not come at the beginning, or even in the middle, before we even get to having a project or proposal that may, or may not, go to ballot. A local authority—the levying authority, to be more precise—should have been working with its business community to identify what the project is, to reach agreement that it will genuinely benefit the local economy, and consequently those businesses, and to produce the prospectus on which that ballot will be held. By the time we get to that stage, the businesses will possibly not need that assurance because they will have been part of the process. I accept that we are not yet in that position. Many businesses in all parts, probably including my own borough, do not yet trust local government—or government generally—enough to proceed on that basis. During the passage of the Bill, we will return to the need to give businesses that reassurance, but I hope that, when we do so, it will be just that: a reassurance that, if it is necessary, it will be at the end of the formative process that I have described. The issue that had not been raised until the noble Baroness, Lady Valentine, spoke was that of giving BIDs the opportunity to levy from property owners. I know that this was debated in the other place. I do not need now to rehearse the arguments, but I believe that the Local Government Minister said that the Government understand the point, that they are working on a number of issues that, quite properly, need to be resolved and that they hope to take this forward during the Bill’s progress through this House. In her reply, I hope that the Minister will give us the Government’s view and will be able to reassure us that they will bring forward proposals to achieve that. Where they exist, BIDs have been enormously successful. I am a strong supporter of them. This overdue measure is widely supported and this Bill should be used as an opportunity to make it possible. In opening, my noble friend said that we will support this Bill in the vein of critical friends and that we will seek to improve it. I do not know the superlative to pristine, but whatever it is we will seek to ensure that when this Bill leaves this House it is improved and even more—I have no other word—pristine than when it arrived.