Business Rate Supplements Bill

Noble Lords opposite should not apologise for the incoherence of their amendments because the argument just made is very coherent and the debate has been clearly set out. The noble Lord, Lord Bates, was doing very well until he got to the end and said that if we had a ballot to assuage local concerns, it would force local authorities to take note of the views of business. However, it would not assuage concerns for the very reasons described by the noble Baroness, Lady Hamwee. She said that traditionally the Liberals always support local government because there are two partners to the contract, and they need not be as opposite one another as the noble Earl, Lord Cathcart, suggests. We are trying to get the balance right between local authorities which, reasonably enough, do not want any form of ballot, and businesses that want to have their say. Those are both perfectly respectable points of view. We have ended up in a position which not only creates trust between the parties—I shall come on to explain why I think that is true—but is also an effective way of tying people into a project in an honourable and sustainable way. Amendments 13 to 17 would require that a ballot is held before any BRS is levied, and the remaining amendments are essentially consequential. I agree absolutely with the conclusion of the noble Earl, Lord Cathcart, that it would be a good idea if local authorities were to ask businesses what is in their interest and what would really help. That is exactly where we hope local authorities will start. This is about economic development, prosperity and greater productivity—all the things we talked about when considering the first amendment. Local authorities will be bound to ask local businesses what is in it for them if they are to come on board as partners, agree to the initial financial commitment and make contributions. Of course the question that must be asked before any other is this: what is going to be the most effective project from your point of view? The notion of consultation is absolutely fundamental to the purpose and the principle of the Bill. We have made it absolutely clear that there is no way that a BRS can be foisted on businesses because that simply will not work. There has to be early, proper and thorough consultation, and certainly the statutory guidance will make it clear that levying authorities should consider how they can involve businesses over and above anything described as a formal consultation. However, the issue of a ballot raises significant concerns, and I understand why noble Lords opposite have been lobbied by businesses about it. Perhaps I may go over the narrative a little. At Second Reading we discussed the fact that it is likely that the BRS would often form part of a wider funding package, marking a crucial link to bring business partnership with it. For example, it could help to pay for a large infrastructure project such as a new or improved transport link. Such a project would bring with it funding streams from bodies such as the Department for Transport, the Highways Agency, and Section 103 agreements as well as BRS funding. Under those circumstances, I would ask noble Lords to think about whether it would be right, democratic or fair that an entire project of some significance that was being marshalled by a balance of partners should be put in jeopardy due to uncertainty over a relatively small but critical element of a funding package. I would argue that it unbalances the partnership and introduces an avoidable degree of uncertainty. It is not worth taking that risk if the BRS is contributing only to a relatively small proportion of the overall funding package, which is one that would genuinely help business because it will be the test to be applied. I do not agree that proportion does not count. The noble Baroness, Lady Hamwee, asked me why the proportion is so important and why we should not do this as a matter of principle and not require a ballot. However, we believe that we have arrived at a fair point. The Bill requires authorities to hold a ballot only if the supplement will fund more than one-third of the total cost of the project. I repeat, one-third—not a half or two-thirds—which is a proper and defensible threshold. The threshold for determining when a ballot must be held represents a judgment between those cases where a BRS can be seen as contributing a relatively large proportion towards the cost of the project and, therefore, have a right to ensure that all members have a say. I will come to the means of voting in a moment. That is as opposed to a situation where the BRS is a smaller player in terms of the overall funding of a project. The policy on ballots was set out in the White Paper, which followed extensive discussions with business and others on how any supplement would best work. Since noble Lords have taken up the case, it is worth putting on the record—the noble Baroness was quite right to say that it is not in the guidance—that the Bill does not prevent levying authorities from holding a ballot if they consider it to be appropriate. The noble Lord, Lord Bates, was uncharacteristically cynical about this in saying that a ballot would be held only if it was going to be approved. I would argue that, if a supplement was opposed by a particularly vocal minority, it might be a very good idea for a local authority to hold a ballot. It would be a mechanism for ensuring that all those who are liable for the supplement are able to have their say. It would tie people into the project. But we would not disagree among ourselves that the key point is that this must be left to local discretion, so that the levying authority can consider if it is appropriate on a case-by-case basis. The noble Earl, Lord Cathcart, and the noble Lord, Lord Bates, raised the white spaces problem in London and the arrangements within BIDs for voting. We have tried to address that in exactly the same way as the BIDs arrangement works. It is the same formula because it is fair. Much of the process in this Bill to do with BRS is modelled on how BIDs work successfully. It is worth restating therefore how we intend the ballot to work fairly so that certain businesses in certain parts of the capital or wherever will not be burdened unduly. It is described as a "double lock" ballot, which means that its success is not determined only by winning a majority in terms of the number of votes cast, as there also needs to be a majority in terms of rateable value. For example, let us take a ballot where 100 businesses with a combined rateable value of £10 million are balloted and 80 of the 100 businesses vote in favour, but where those that voted in favour tended to occupy premises with lower rateable values. Therefore, the combined rateable value of those which voted in favour was £4.5 million, which would be less than 50 per cent of the total rateable value of all those which voted. In such cases, the BRS would not go ahead because the 50 per cent had not been achieved on both criteria. That is exactly how BIDs operate.