Local Government Bill

Public Bill Committee, 4 February 2003.

Standing Committee A

Local Government Bill

Derek Conway (Conservative, Old Bexley and Sidcup)

Good morning, everyone, and welcome to another exciting sitting. We move on with great courage to clause 32 and amendment No. 85.Clause 32 Ancillary powers

Clause 32 - Ancillary powers

Edward Davey (Liberal Democrat, Kingston and Surbiton)

I beg to move amendment No. 85, in

clause 32, page 14, line 21, leave out 'require' and insert 'ask'.

It is a real pleasure, Mr. Conway, to see you back in your place. Like us, you are full of enthusiasm.

Subsection (2) states:

''A Minister of the Crown may in connection with that section''—

that is clause 31, which is about the power to pay grant—

''require a local authority to formulate policies in relation to any matter.''

The amendment is about democracy; it is about whether or not local authorities should be free to spend the moneys that they receive from local and national taxpayers.

The Government tell us—we shall doubtless debate the matter in detail on the Floor of the House—that they want to reduce ring-fencing. They want to ensure that local authorities receive their grants and revenue from the local taxpayer and use the money as flexibly as possible. The reason for the amendment is that I believe that the Government have made a drafting error. I think that they meant to ''ask'' not ''require'' local authorities, because the latter goes against the Government's rhetoric and their policies. It is bizarre that the Government should ''require'' local authorities to formulate policies in exactly the manner that the Deputy Prime Minister and his colleagues want; I would have expected a Government who talk about local democracy to do the reverse of that.

I expect an early treat today. I expect the Minister to say that he believes in local democracy. I hope that he will say, ''The hon. Gentleman is right; we meant 'ask'. We do not require local government to do exactly what we say in every aspect of their policies, and we will accept amendment No. 85.''

Desmond Swayne (Conservative, New Forest West)

There is indeed something sinister about the wording of subsection (2). I wonder whether the Minister would explain the distinction—if there is one—between requiring a local authority to formulate policies on a particular matter and determining what those policies are. I hope that the Minister will assure us that there is

such a distinction. Otherwise, there is little point in placing a duty on the local authority to formulate policy if the Minister is going to do it himself.

Geoffrey Clifton-Brown (Conservative, Cotswold)

Good morning, Mr. Conway. I apologise for being a minute or two late. Perhaps we should ask the House of Commons cleaners not to occupy the lifts at 6 minutes to 9 in the morning. I may not have the running power of Seb Coe, but I assure the Committee that it took me approximately a minute and a half to get here from my office on the fourth floor of Portcullis House.

The hon. Member for Kingston and Surbiton (Mr. Davey) makes a good point with amendment No. 85. The ancillary power contained in subsection (2) could be particularly onerous. The Minister should explain it in context. Although the Government are always giving local authorities new duties, they do not often finance them—and even when they do finance them, they do not finance them in full. Added to the duties that the Government, through the Secretary of State, impose on local authorities, are the new duties that will be imposed by whatever type of regional bodies—God forbid—that emerge. There are huge powers under the Planning and Compulsory Purchase Bill for the regional planning body to require local authorities to carry out a vast range of duties, for most of which they will not be reimbursed. This is a sensible amendment, as the clause as drafted could be very onerous. It will also be difficult for the Audit Commission or the Public Accounts Committee to scrutinise properly what is being requested of each local authority. The Minister will be more familiar than I with the fact that it is not just financial transactions that the Audit Commission, the Public Accounts Committee and the National Audit Office scrutinise; they also scrutinise best value for money. They have a role in scrutinising whether Government instructions to local authorities are reasonable. If the Minister is reasonable, he will accept the amendment from the hon. Member for Kingston and Surbiton.

Nick Raynsford (Labour, Greenwich and Woolwich)

The Minister is reasonable, but he will not accept the amendment from the hon. Member for Kingston and Surbiton. I was disappointed by the hon. Gentleman. We heard the usual rhetoric from him and from the Liberal Democrats about democracy and devolution and all the rest. He actually accused us of making a drafting error when moving his amendment. I must say to him that the drafting error was made in his amendment. Why have the Liberal Democrats been so timid? Why are the Tories behind the times? Of course, we know about the hon. Member for Cotswold and his encounter with the cleaners. In both cases, the Opposition have not recognised that there was a good intention behind this subsection: to ensure that we have the necessary information when we are making grants to a local authority.

Geoffrey Clifton-Brown (Conservative, Cotswold)

Does the Minister accept that I had a good intention to be here on time?

Nick Raynsford (Labour, Greenwich and Woolwich)

I know that the hon. Member for Cotswold always has a good intention; it is simply his misfortune to have joined an outfit that is constantly

accident-prone. The purpose of subsection (2) is to assist in the provision of information to enable the Government to pay grants to local authorities. On reflection, we believe that there is no need for that subsection at all, and on Report I intend to table an amendment to delete it entirely. I hope that the Committee will approve that and understand why I ask the hon. Member for Kingston and Surbiton to withdraw his amendment.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

I had expected the Minister, because he is such a reasonable chap, to give us an early victory; I did not, however, anticipate such a huge retreat. [Interruption.] The hon. Member for Scarborough and Whitby (Lawrie Quinn) asks whether it is the Minister's birthday. It is neither his birthday, we had that last week, nor is it mine. The Minister has made a very wise and sensible decision, and he will gain plaudits from both sides of the Committee for it, and from local government throughout the country. It augurs well for the morning's proceedings. Therefore I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 32 ordered to stand part of the Bill.

Clause 33 - Application to Greater London Authority

Edward Davey (Liberal Democrat, Kingston and Surbiton)

I beg to move amendment No. 86, in

clause 33, page 15, line 3, at end insert—

''(6A) No grant may be paid under this section in relation to any agreement under the Public-Private Partnership for London Underground.''.

I doubt that we will be quite so fortunate on amendment No. 86. The Minister may even accuse me of being slightly mischievous in moving it. We tabled the amendment because, under clause 33, the GLA will be able to receive grants at the will of Ministers without any check by Parliament. We debated parliamentary scrutiny of expenditure, and the Minister undertook to read my paper on the issue.

I do not want to retread that ground, but it is vital that we scrutinise clause 33 to consider what moneys are to be paid to the GLA at the whim of Ministers. We are approaching the matter in a slightly different way because the obvious grants that could be paid to London Underground without scrutiny are grants to support the public-private partnership. That takes me and the Minister down a nostalgic route because I think it was in this Committee Room that we debated, for more than three months, the Greater London Authority Bill, which set up the framework for the public-private partnership for London Underground. I shall not rehearse the many and long arguments that were advanced in that Committee, except to say that we did not agree with the Government's approach. We said that the Government's financing models were wrong, that they would not manage to sign the contract for many years—we were proved right on that—and that they would end up having to put a lot of taxpayers' subsidy into the system because it was such an inefficient way of raising and allocating finance.

Hon. Members may think me cynical, but my fear is that clause 33 is the bail-out clause for the public-private partnership, which will enable the Government to lever in money to rescue their failed London Underground project. The Committee that debated the Greater London Authority Bill in huge detail over three or four months, during which my hon. Friend the Member for Southwark, North and Bermondsey (Simon Hughes) entertained us with the details of public-private partnership, did not see any legislation that would allow a bail-out of PPP. That was controlled in the mother legislation. This clause has been sneaked into a Bill that is completely unrelated to PPP and the powers of the Greater London Authority and would allow the bail-out that we predicted would take place. Therefore, before the Committee assents to this extremely large clause, we need some assurances. If the Minister can give us an assurance that the Government have absolutely no intention of using the powers in clause 33 to bail out the London Underground PPP, we may be able to achieve some consensus, but if the Minister is unable to give us that assurance, we may have to press the amendment to a vote.

Nick Raynsford (Labour, Greenwich and Woolwich)

Clause 33 slightly adapts the grant-making power in clause 31 for the purpose of the GLA. It takes account of the special relationship of the authority with its four functional bodies and acknowledges the central role of the Mayor in the GLA structure.

Amendment No. 86 would prevent the new power from being used to support the London Underground PPP. As the hon. Member for Kingston and Surbiton will recall from his time serving on the Committee that considered the Greater London Authority Bill, we already have the power under section 101 of the Greater London Authority Act 1999 to provide financial support for the tube when it transfers to Transport for London ownership, so we would not expect to need to use the new power for that purpose, and we certainly have no intention of bailing out the PPP, which will achieve substantial investment for improving the much-neglected infrastructure of the London underground. However, I do not intend to debate that now.

We want to retain some discretion in the matter because we might conceivably need the flexibility that the new power will allow. The amendment could have unforeseen and unfortunate consequences. For example, the Government might use the new power to support a London borough's initiative to reduce crime in the vicinity of its local underground station. Measures could well include the installation of CCTV cameras on London Underground property itself. The most practical option might be for the PPP contractors to do the work under a variation to their contracts, in return for some share of the grant. The amendment would make that impossible, which is why we do not want to accept it, although I can give the hon. Gentleman the assurance that he seeks that there is no intention to use the provision as a main source of funding for the PPP, for which it is not necessary in any case, as the PPP is a financial arrangement in its

own right, with its own grant-making powers available to the Government.

The arrangements in the clause do not disadvantage the bodies at all. It would not be possible for the Mayor to divert resources in a way that would be contrary to the intentions of Ministers, and I hope that the hon. Gentleman will recognise the good sense of retaining the Bill as currently drafted, which is designed to cope with the special and different circumstances of the GLA. I hope that he will withdraw his amendment.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

I was not completely convinced by the Minister's reply. On some of the examples that he gave, one can see many ways round the potential problems he suggested that the amendment would give rise to. In relation to the example of a local authority seeking to take anti-crime measures near a station that was being refurbished by the PPP, one could make grants to that local authority under clause 31. I was not convinced by his argument on that matter. He might have more of a point when he says that it might be more efficient for the contracts of PPP contractors to be changed slightly, so that anti-crime measures could be included. I had not considered that point, which seems reasonable.

I am pleased that the Government have again said that there will be no bail-out of the PPP—that the project will live and die on its own merits. However, I was slightly concerned to hear the Minister say the Government have that bail-out power anyway. That was not how the matter was described when we debated that particular legislation. We were given categorical assurances then that there would be no bail-out, just as we were given categorical assurances about many other aspects of the PPP, which have not been valid. I think that this short debate—I shall bring my remarks to a close shortly—has been worth it, because the Minister has yet again said on the record that there will be no bail-out of the PPP. For Londoners, I hope that he is right, and that the project will work in the way that the Minister has suggested.

It is in no one's interest for the tube to grind to a halt. As we have seen recently during the fire strike and after the accident on the Central line, the closing of many stations causes huge inconvenience. However, many of us remain to be convinced that the model that the Government have chosen for London Underground will work in the way that they describe. Despite the Government's assurances, I still fear that at a future date the Minister or his successors will have to come to the House to justify using national taxpayers' money to bail out their failed project. However, that debate is for another day, and therefore I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Question proposed, That the clause stand part of the Bill.

Desmond Swayne (Conservative, New Forest West)

Subsection (2) places a condition on the Mayor to pass on funds to a functional body. I notice that under subsection (5) the Mayor enjoys that power even when he is not placed under such a

condition. In his earlier response, the Minister said that the purpose of the clause is to adapt slightly the powers granted under clause 31, and I wish to probe him on that. Given that under clause 31 a Minister may make a grant to whomever he determines—a huge, sweeping power—he can therefore hand the money directly to a functional body, should he so wish. Why is it therefore necessary to have clause 33, and subsection (2) in particular, which enables a condition to be placed on the Mayor, so that the Mayor has to pass the money on to a functional body? Under the powers granted under clause 31, the Minister can give the money straight to the functional body himself.

Geoffrey Clifton-Brown (Conservative, Cotswold)

My hon. Friend the Member for New Forest, West makes an interesting point. I had not spotted the difference of emphasis between subsections (2) and subsection (5), which the Minister might like to explain. It appears that subsection (5) weakens the requirement in subsection (2). Subsection (5) says that the Mayor may transfer the grant to a functional body. Presumably it means that he may not also. The Minister needs to explain that. I would also be grateful if he could explain the need for the clause. Why not simply include a clause that says that the Minister may pay a grant either to the Mayor or to a functional body? If the Minister paid the grant direct to the functional body there would be no need for all this complication.

I should also be glad of explanation of subsection (6). Who is the transferee and who is the transferor? It is not entirely clear. The Secretary of State transfers the grant to the Mayor, who transfers it to the functional body. Which in that chain is the transferee and which the transferor? I suspect that the Minister will say that it is all about devolution—about giving the Mayor more devolved powers. The Minister shakes his head, so he must have another explanation. I shall be happy to listen to it.

I am concerned about clause 31(1), referred to by my hon. Friend, which states:

''A Minister of the Crown may pay a grant to a local authority towards expenditure incurred or to be incurred by it.''

That is a wide power. I am still concerned about how, under these clauses, we will track the money, both to ensure that we obtain best value and to ensure that fraud or misappropriation is not involved. In giving away the powers concerning where money is to be spent, the Minister needs to assure the Committee in strong terms how it will be properly tracked and monitored.

Nick Raynsford (Labour, Greenwich and Woolwich)

Clause 33 slightly adapts the grant-making power in clause 31 for the purposes of the Greater London Authority. That is its purpose. It is not a special devolution arrangement; it is to take account of the special relationship of the authority with its four functional bodies—Transport for London, the Metropolitan Police Authority, the London Fire and Emergency Planning Authority and the London Development Agency. It is a unique relationship in local government and its unique circumstances necessitate the clause.

The grant power will operate in basically the same way as for other authorities, but any grants intended for the functional bodies, because of the structure of the GLA, have to be paid first to the Mayor and then, with the provisos in subsections (2) and (4), transferred to the individual functional body.

Clause 33(5) is separate. It allows Ministers also to pay grants to the Mayor that are not earmarked for any individual body. That gives the Mayor discretion as to how to use the grants. Those are the two separate functions that apply in the case of the GLA that require a special formulation. There is nothing sinister about it; it is a reflection of the structure of the GLA, of which the hon. Member for Cotswold would probably have a deeper understanding if he had suffered for three months, along with the hon. Member for Kingston and Surbiton, on the Greater London Authority Bill Committee. I hope that hon. Members will accept that the purpose of the clause is to ensure proper measures to scrutinise expenditure and to counter fraud. The arrangement whereby all grants have to go via the Mayor with a central financial control is clearly advantageous in that respect.

Question put and agreed to.

Clause 33 ordered to stand part of the Bill.

Clause 34 - Wales

Geoffrey Clifton-Brown (Conservative, Cotswold)

I welcome the Under-Secretary of State for Wales to the Committee. If he has come to deal with the two lines of clause 34, he has had an interrupted morning. Perhaps we shall hear more from him later. I could not let this little clause, two lines long as it is, go without comment. It states:

''In the application of this Chapter to local authorities in Wales, references to a Minister of the Crown include the National Assembly for Wales.''

I did not say what I said just now to the Minister for Local Government and the Regions without purpose. I led him into a trap, into which he fell beautifully. That has now put his hon. Friend the Under-Secretary into the position of needing to do some explaining. Whereas the Government are keeping control of devolution to London and the regions—the Planning and Compulsory Purchase Bill is hedged with huge controls over the regions—in Wales, by contrast, the Government are prepared to devolve everything, including financial powers.

I am sure that the Under-Secretary will confirm that exactly what the clause means is that the money will be given to the Welsh Assembly. Under clause 31(1), which I have already read out, it may disburse the money to any of its local authorities. It is entirely up to the Welsh Assembly how that money is disbursed. If my interpretation is correct that we have a fully devolved power for financial purposes, my next question for the Under-Secretary is: how does the Westminster Parliament, which gives the block grant

to Wales, retain control over that money? How does Parliament track that best value is being achieved from the spending of that money? How does it track that the money is not being defrauded or misappropriated?

We must ask those serious questions of those devolved functions, because while Westminster looks after the taxpayers' money that is raised throughout the United Kingdom, we have a responsibility to ensure that it is spent and disbursed properly. I look forward with interest, as always, to a courteous explanation from the Under-Secretary.

Don Touhig (Labour/Co-operative, Islwyn)

May I say at the outset, Mr. Conway, on my first appearance to speak in Committee, that I am delighted to serve under your chairmanship? I also express my deepest appreciation to you and your fellow Chairman, Mr. Griffiths, and to all colleagues on the Committee, for the understanding that has been shown for my absences. In the past few weeks I have served on three Bill Committees, including the Planning and Compulsory Purchase Bill Committee, like the hon. Member for Cotswold. I am grateful that my colleagues appreciate that.

The grant power in clause 31 will operate in Wales, whereas clause 34 provides that the grants will be awarded at the discretion of the National Assembly for Wales. As is probably made clear in clause 31(5), the Treasury's consent is required to award the grants in England. That consent will not be required in Wales because it is a matter for the National Assembly under the devolved settlement. The Assembly intends to put in place controls to ensure that that power is exercised prudently and properly.

I fear that we might rehear some of the arguments that we had in the Planning and Compulsory Purchase Bill Committee with the hon. Gentleman. God has made it my mission in life to explain to the Tories what devolution means. It means that this Parliament has created a system of devolved government. That applies to Wales, and, under the Government of Wales Act 1998, a large number of responsibilities that the Secretary of State for Wales, in partnership with other Ministers, previously exercised are now the responsibility of the National Assembly. Clause 34 means that, under the devolution settlement, the Assembly has the power and the right already given to it by this Parliament to exercise those responsibilities. I constantly have to explain that to the hon. Member for Cotswold. I do not know how else to do it, other than to keep reiterating that that is what Parliament has decided.

Martin Caton (Labour, Gower)

Is it not a cause for dismay that, although Conservatives in Wales—not all, but an increasing number—are beginning to understand the nature of devolution and want to work within the devolution settlement, we find that Conservatives in Westminster are still trying to re-fight the debate that we had at the time of the referendum?

Don Touhig (Labour/Co-operative, Islwyn)

I take my hon. Friend's point. Without testing your patience, Mr. Conway, in the Planning and Compulsory Purchase Bill Committee we had difficulty in explaining to the Conservatives on an

amendment that they moved that the border of Wales did not touch the border of Greater London. I had to bring in an atlas to show them that.

This is a devolved matter, which is the responsibility of the National Assembly. The hon. Member for Cotswold was concerned that this place votes a block sum of money to the Assembly to meet the Assembly's expenditure requirements and needs. Yes it does. However, the Assembly is totally open. All its accounts are properly audited. The audit system operates in the Assembly as it does in any Department or aspect of government here. Indeed, the Assembly is ahead of us in terms of being more open and accountable.

Geoffrey Clifton-Brown (Conservative, Cotswold)

I put it on the record that I was not seeking to re-open the devolution settlement. That has finished and the people of Wales voted on it. The hon. Gentleman is giving a useful explanation of matters, but will he explain precisely the Welsh Assembly's auditing methods? How do they mirror what the National Audit Office and the Audit Commission do for local authorities in England?

Don Touhig (Labour/Co-operative, Islwyn)

The report on the Assembly's accounts goes to the Public Accounts Committee here. It is audited by the National Audit Office, so matters are open and transparent. I can tell the hon. Gentleman that all the measures taken by the Assembly to ensure that audit expenditure is properly accounted for are open.

Question put and agreed to.

Clause 34 ordered to stand part of the Bill.

Clause 35 - Interpretation of Chapter 1

Desmond Swayne (Conservative, New Forest West)

I have spotted an opportunity, and I hope that you will forgive me for attempting to exploit it, Mr. Conway. I am certain that I am in order. If I am not, I know that you will rescue me. You were in the Chair at our previous sitting. I have just been looking through the Hansard report of our discussion on clause 31. I know that it was 5.30 pm and that it had been a long day, but I seriously wonder whether we, as a Committee, were not all asleep. There was little discussion on the enormous powers granted under clause 31, nor was there a vote on clause stand part. However, clause 35 defines the local authorities to which those powers can now legitimately be applied. I refer to the enormous power under clause 31, which states:

''The amount of a grant under this section and the manner of its payment are to be such as the Minister of the Crown concerned may determine . . . A grant under this section may be paid on such conditions as the Minister of the Crown concerned may determine.''

What is there to prevent the authorities listed under clause 35 from receiving a grant under the powers under clause 31 that is outwith what would usually be understood as the vires of their proper authority? I know that it is absurd to suggest it, but what is to prevent a Minister from making a grant under subsection (1)(l) to

''a fire authority constituted by a combination scheme''

to run libraries? I am not asking the right hon. Gentleman to say that he has never considered such a thing. Under the powers granted under clause 31, what prevents such action from taking place? Obviously, we cannot determine what may motivate future Governments who may want to ride roughshod over certain parts of local government. I fear that we may have already sold the pass, but at least we have the opportunity to recognise that.

Andrew Turner (Conservative, Isle of Wight)

I am glad that my hon. Friend the Member for New Forest, West started the debate on the clause, because many other clauses are covered by the same interpretation of a local authority. Used in conjunction with other clauses, it enables the Secretary of State to pay to a local authority of his choice a grant amounting to 100 per cent. of that local authority's expenditure. If he decided, for example, to be particularly beneficent to the Isle of Wight council—

Nick Raynsford (Labour, Greenwich and Woolwich)

Which he has been.

Andrew Turner (Conservative, Isle of Wight)

I acknowledge that. I did not cite that example at random but because I wanted the opportunity to thank the Minister for responding to the all-party delegation of councillors that I led.

Desmond Swayne (Conservative, New Forest West)

Has that not gone to the very heart of the problem that will be exacerbated in future because of the huge discretion given to the Minister? He might be munificent to my hon. Friend's constituency, but he certainly has not been munificent to mine. The caprice that we have delivered into the hands of the Minister through the powers granted by the clauses fills me with dread.

Derek Conway (Conservative, Old Bexley and Sidcup)

Order. Before the hon. Member for Isle of Wight (Mr. Turner) replies to the intervention made by the hon. Member for New Forest, West, I remind the Committee that whether or not it is believed that members of the Committee were asleep during our previous sitting, clause 31 was debated and stands part of the Bill. I am sure that the Minister will not be tempted to reopen the debate on clause 31 when he replies but will stay with clause 35, which we are now debating.

Andrew Turner (Conservative, Isle of Wight)

No, indeed, or yes, indeed, as the case may be, Mr. Conway.

I shall not attempt to respond to my hon. Friend the Member for New Forest, West because he has not benefited from the Minister's munificence in the way that my local authority has. It is great to be able to describe the pleasure that was expressed by councillors of all parties on the Isle of Wight council yesterday when they heard that instead of getting an additional grant for next year of 3.9 per cent., which would have allowed a 6 per cent. increase in spending, we shall get a 5.9 per cent. additional grant next year. That makes it difficult for the Liberal Democrats, who lead the council, to explain why they were talking about imposing an 18 per cent. council tax increase. [Interruption.] Yes, having cake and eating it is exactly how the Liberal Democrats are behaving because they say that the increase still has to be nearly 18 per cent.

I shall make a point that is more within order, although you will correct me if I am wrong, Mr. Conway. It is the interpretation of a clause that matters, not the wording of it. The interpretation of clause 31 provided by clause 35 is that the Minister, or any future Minister, could give a grant to a local authority of 100 per cent. of its expenditure to allow it to set a nil council tax. Several Labour Members are chuntering in the background, but perhaps the Minister has a perfectly good explanation that will show that the definitions in the clause would prevent him from paying a 100 per cent. grant to a local authority. If that is the case, any opposition I might have to the clause standing part will become null and void and unnecessary. I would be grateful to hear the Minister's explanation.

Geoffrey Clifton-Brown (Conservative, Cotswold)

I fear that I need to reopen a further argument that we had during consideration of the Planning and Compulsory Purchase Bill: whether the list of authorities needs to, and should, include unitary authorities and whether there has been an error in the drafting, as the hon. Member for Kingston and Surbiton said earlier. As there is still confusion, we should spend a few minutes examining the matter because the list appears in many other clauses in the Bill, which I shall adduce in a minute or two.

The list in clause 4(2) of the Planning and Compulsory Purchase Bill reads:

''a county council; . . . a metropolitan district council; . . . a district council for an area for which there is no county council; . . . a National Park authority.''

On 14 January 2003 in Standing Committee G, the Under-Secretary of State, Office of the Deputy Prime Minister, the hon. Member for Harrow, East (Mr. McNulty) said:

''On a more specific point, the definitive list of unitary authorities includes county councils, metropolitan district councils and district councils for an area in which there are no county councils—that is it.''

He was more definitive still at column 120. He said, in his usual bullish way:

''There is no such term as 'unitary authority' in primary legislation. To add unitary authority as an additional definition would be irrelevant, because it is not a recognised concept in primary legislation; it is merely a device used by the local government boundary commission and others to determine what an authority does.''—[Official Report, Standing Committee G, 14 January 2003; c. 113, 120.]

Unfortunately, the Minister had to eat humble pie. In a letter to me dated 28 January 2003, which was headed ''Unitary Authorities'', he wrote:

''I would like to clarify my comment last week on whether other primary legislation uses the words 'unitary authority'. My officials at the time thought that the term was not used elsewhere in primary legislation. But after checking the point it transpires that in fact that there are some references. I am advised that the term is used in other primary legislation, for example, section 8 of the Sunday Trading Act 1994, section 7 of the Dogs (Fouling of Land) Act 1996, section 16 of the Vehicles (Crime) Act 2001 and section 144 of the Adoption and Children Act 2002.''

We need to get the matter cleared up. We clearly have unitary authorities. They are recognised, stand-alone authorities. I accept that they have the powers of both

county and district councils, but they are a different type of authority.

I had a quick look through the Bill late last night and discovered similar lists of authorities in clauses 23, 35, 40, 41and 61. Indeed, clause 61 on business improvement districts, refers to unitary county councils, whatever they might be.

Andrew Turner (Conservative, Isle of Wight)

Will my hon. Friend give way?

Geoffrey Clifton-Brown (Conservative, Cotswold)

I shall finish the list before giving way to my hon. Friend.

Clause 61 refers to unitary county councils, and clauses 99, 103 and 114 have similar lists of authorities. That may not be the entire list of clauses, but I suspect that the entire Bill, including its complicated schedules, is not entirely consistent in the lists that it gives. I wonder also whether such legislation should use the words unitary authority.

I happily give way to my hon. Friend. In doing so, I congratulate him on the financial settlement that he has secured for his authority. It is well deserved, not least because, on every occasion, my hon. Friend raises the problems of his constituency. He is an assiduous MP, and he deserves that success.

Andrew Turner (Conservative, Isle of Wight)

I thank my hon. Friend for those kind words. In the circumstances, it seems almost churlish to intervene. I simply wanted to point out that Isle of Wight is a unitary authority, which is defined as a county council. That is identified by the fact that the elections for that authority are held at the held at the same time as county council elections.

Geoffrey Clifton-Brown (Conservative, Cotswold)

I am not sure whether that intervention was helpful; it may have made the Minister's case for him. I think I shall ignore it. I shall have a word with my hon. Friend afterwards and ask him to think twice before he seeks to intervene again.

The list may not be exhaustive, and that confusion may apply in other clauses and schedules. There may be an inconsistency. I shall listen with interest to what the Minister has to say, but it is clearly not the last time that such lists will appear. Assuming that we ever get that far, we shall soon need a boundary commission recommendation for unitary authorities across the entire country of England prior to referendums being held on elected regional assemblies. God forbid that we ever get that far, but if that is what is in the Government's mind, the problem will clearly become ever more acute.

I shall listen to the Minister with interest. Perhaps he will be able to clear up the confusion left by the Parliamentary Under-Secretary of State, Office of the Deputy Prime Minister, the hon. Member for Harrow, East.

Nick Raynsford (Labour, Greenwich and Woolwich)

Clause 35 is simply the list of local authorities to which grants may be paid under the power given in clause 31. As has been observed, we debated the powers to give grants at an earlier stage, so I shall not say much in response to the issues raised by the hon. Member for New Forest, West because it might be out of order. However, there is no question of grants made under powers in this part of the Bill being used as an alternative to the formula grant that

we have just announced, which will be debated in the House tomorrow and which is the main mechanism for the distribution of grants to local government. It is governed by a formula that provides a safeguard against the kinds of anxieties that the hon. Gentleman expressed.

Desmond Swayne (Conservative, New Forest West)

Is the Minister telling me that that simply cannot be done, or that it simply will not be done?

Nick Raynsford (Labour, Greenwich and Woolwich)

It will not be done, because there is an alternative mechanism—the formula grant system—for distributing the main grant to local government. That applies to all local authorities and a Minister who chose to ignore that and who wanted to pass money by means of another route would almost certainly be open to challenge. I can assure him that that will not be done. The formula pertains to additional grants for specific purposes, a wide range of which we covered when we debated clause 31. I hope that the hon. Gentleman will acknowledge that and that it puts his fears to rest.

I enjoyed the hon. Member for Isle of Wight's description of the issue—the formula grant—and of the all-party representations that his local authority made. I was pleased to respond to the clear evidence, which related to a technical issue, about whether the Isle of Wight should be treated as a separate area for the area cost adjustment. Despite the fact that the Isle of Wight is designated as a county council—a fact the hon. Gentleman rightly raised and which the hon. Member for Cotswold was less pleased to hear—we felt that it would be wrong to treat it as a separate unit, because of its size and because of the potential weakness of the sample in that context. That is why we have agreed with the point that he raised.

The hon. Gentleman said that it could be possible that funds might be used to cushion the council tax. It is unwise for Opposition Members to raise such an issue, given the highly publicised treatment of one or two central London councils by the previous Conservative Government in the 1980s and 1990s. I will, however, pass over that matter.

While the promenade by the hon. Member for Cotswold through some obscure legislative byways, including the Dogs (Fouling of Land) Act 1996, was entertaining, the reality was highlighted by the hon. Member for Isle of Wight. The term ''unitary council'' can be used—it certainly is used in some contexts—to cover both county and district councils that have assumed the full unitary powers. We do not, therefore, consider that changes need to be made to the framework in the clause, which lists all local authorities, including county and district councils.

There is scope for misunderstanding, because the word ''unitary'' is often understood to refer to authorities, including the London boroughs and metropolitan authorities, that are responsible for all local government services in their areas. For the sake of precision, we do not use the word ''unitary'', but refer instead to bodies such as county, borough, district or London borough councils, that are perhaps more readily understood.

Geoffrey Clifton-Brown (Conservative, Cotswold)

Let me try once again. There is scope for confusion. The term ''unitary authority'' is generally taken to refer to the full powers of a merged borough or district council and a county council, which takes on all the functions of both, such as planning and waste disposal. Waste disposal policy might be the responsibility of a county council, whereas planning could be a district council's responsibility. The two functions would be merged, as the Government propose in their White Paper ''Your region, Your Choice'', and it would be understood that that usually referred to a unitary authority. However, the Minister confuses the issue by saying that in some instances a unitary county council, for example, the Isle of Wight, could be called a unitary authority. As I understand it, the term could also apply to a unitary metropolitan district council, which would cause further confusion. This matter must be cleared up. We should be very clear about the terms that we use. There is confusion, the Government must address the matter and the term ''unitary authority'' should be included in the Bill.

Nick Raynsford (Labour, Greenwich and Woolwich)

There is no confusion. Anyone who reads the provision that contains the list will be well aware of the authorities that are eligible to receive grant. The introduction of the term unitary might allow a degree of confusion for the reasons that the hon. Gentleman identified. That is why we are not using it in the clause; we are listing the authorities so that there can be no confusion as to which are eligible to receive grants.

Geoffrey Clifton-Brown (Conservative, Cotswold)

At the risk of being out of order, but it is pertinent to the debate, will the Minister to turn to clause 61, where he will see the term unitary county councils? There is an inconsistency in the Bill. In some instances, those are mentioned and in others they are not. That cannot be the right way to go about making primary legislation.

Nick Raynsford (Labour, Greenwich and Woolwich)

That is not the case at all. The purpose of the clause is to define the authorities that are eligible to receive grants under clause 31. There is no ambiguity or confusion. Every authority that is listed is eligible to receive a grant. In different contexts, there might be references to unitary county councils or to other unitary authorities. The term unitary can embrace a range of different bodies and can be subject to different interpretations. That is why we do not use it in the case of clause 35, which needs to be precise—as the hon. Gentleman will recognise—in defining the authorities that are eligible to receive grants. When we come to clause 61, my hon. Friend the Member for Shipley will explain why it is appropriate to have a reference to unitary county councils in that context. However, it is a different context and there is no scope for confusion.

Question put and agreed to.

Clause 35 ordered to stand part of the Bill.

Clause 36 - Best value grant: parishes

Desmond Swayne (Conservative, New Forest West)

Can the Minister explain subsection (1)(a)? It concerns

''A parish council subject to any of the duties in sections 3 to 6 of the Local Government Act 1999''.

Looking at those duties, it is clear that they are not a menu. Clause 3 (1) says that

''A best value authority must make arrangements to secure continuous improvement''

and clause 3(2) says that an authority must consult, and lays out those with whom it must consult. Clause 5(1) says that

''A best value authority must conduct best value reviews'',

and, under clause 6(1)

''A best value authority must prepare a best value performance plan''.

In each case, a best value authority must conduct all those functions; not any function, all of them. It troubles me that we should state that a parish council is subject to any of the duties, because if it is subject to one of them, it is subject to all. Is this merely a question of a loose use of language—in which case I shall be satisfied because it is not that grave—or have we missed something that is implicit in the use of ''any'' and about which we should be aware because of its implications in the clause?

Robert Syms (Conservative, Poole)

I want to flesh the clause out in more detail. When I was a rural county councillor with 6,000 or 7,000 electors, I had some 11 parishes in my area. Can the Minister tell us whether a grant of £30,000 per year is open to any parish, of whatever size? Does that just relate to town councils in areas in which parish councils turn themselves into town councils? I notice that the grant is of £30,000 per year, not up to £30,000 per year. Is that a standard block grant that would not be varied if the council hit a particular target? Can the Minister give me a definition of size, an idea of how many councils qualify and some more detail as to what would be expected from a parish council in order for it to qualify for the £30,000 grant?

Geoffrey Clifton-Brown (Conservative, Cotswold)

We now move to a slightly different subject; best value parishes. I assume that ''parishes'' includes town councils and parish meetings.

Nick Raynsford (Labour, Greenwich and Woolwich)

Yes.

Geoffrey Clifton-Brown (Conservative, Cotswold)

That is helpful. I assume also that it applies only to England. I understand that only 41 parishes currently satisfy the best-value criteria to qualify for the £30,000 grant to cover the audit and corporate costs of carrying out work relating to the best value functions; for example, performance bands and management reviews, and the functions helpfully read out by my hon. Friend the Member for New Forest, West, contained in the Local Government Act 1999.

How much money has the Minister's Department set aside for the next three years to deal with the provisions of subsection (2)? Is the Minister constantly reviewing which parishes should receive best value status? Is an announcement likely soon on more whether more parishes will be given best value status?

I have a slight problem with parish meetings, because many parishes are small hamlets; sometimes a group of only two or three houses. Would it usually be relevant for them to have best value status? Even if it were relevant, would they be willing to manage the increased duties? Will the Minister confirm that the best value status lasts for only a year? If not, how long does it last, and how can parish councils plan for what they have to do?

Is there a mechanism for parishes to review whether they have reached the objectives set out in their plan when applying for best value status? What are the criteria for determination of best value, and is there a regional basis for awarding best value? Will the Minister give a fuller explanation? He unusually failed to give one when we last debated parish councils. Even if only the best value parish councils are required to take on extra duties, it follows that others are taking on fewer duties. I presume that those others must be the local district or borough councils. What will happen to their budgets as a result of devolving duties down to the parish councils?

We fully approve of as much power as possible being devolved down to parish councils, if the parish councillors feel able to take on those extra duties. It is entirely in line with our policy of devolving down to the lowest possible level, but I should like to hear from the Minister how it is expected to work.

We approve of best value councils, with the best being encouraged to do even better, but how will the mechanism encourage the laggards—those at the bottom of the pile—who do a pretty lousy job on behalf of their communities? How will the mechanism encourage them? Will there be some form of twinning, or will the best value councils be able to give advice to poorly performing parish councils?

Finally, I reiterate what I said at an earlier sitting. We hear not only anecdotally but from our constituency correspondence that a number of parish councillors are resigning because of the increasing complexity of the tasks being imposed on them. We must be mindful of the fact that we want to encourage a broader spectrum of the community to become parish councillors. If parish councillors do not wish to take on those duties, the duties should not be forced upon them.

The auditing regime that is envisaged may be a problem, because a large part of the £30,000 grant will be spent on the increased complexity of the audit requirements. I suspect that those increasingly complex audit requirements will be beyond the grasp of some parish councillors. If they feel that things are going on that they cannot fully grasp, one should not be surprised if they feel disinclined to continue to be parish councillors or, indeed, decline to stand for the parish council in the first place. That would make the system work a little less well than it does at the moment, so I wonder whether some of the measures are counter-intuitive. I should be grateful if the Minister gave us a reasonable explanation of how the provisions will work and say what new functions parish councils would have to carry out.

John Pugh (Liberal Democrat, Southport)

Much has been made of the Minister's munificence so far, and this seems to be another opportunity for him to show some minor munificence. What he said in response to the hon. Member for Isle of Wight showed some munificence, but it was not based on firm criteria. It was not, however, an act of caprice, as the hon. Member for New Forest, West suggested, although Ministers have acted capriciously in the past in relation to certain London boroughs and favouritism towards individual parish councils could be shown in theory. I notice that many clauses refer to the Minister acting as he sees fit, and I wonder whether anything in the Bill or in regulations that I have not so far discovered would prevent any Minister—maybe not this Minister—from acting capriciously and giving out small sums of money to selectively favoured authorities.

Nick Raynsford (Labour, Greenwich and Woolwich)

We have had an interesting short debate. I hope we will be able to make quick progress through the next few clauses, which are straightforward and demonstrate munificence. The Committee would be disappointed if we did not have good time to debate the highly innovative business improvement district programme in part 4.

Turning to the various points raised in the debate, I should first define a best value parish. In answer to the hon. Member for Southport (Dr. Pugh), there is no risk of the clause being used capriciously because a best value parish is defined as one that has a budgeted income of at least £500,000 over three years. We are currently considering the years 1997–98, 1998–99 and 1999–2000, so there is no scope for a Minister to vary that definition. Any parish council with a budget over that amount is defined as a best value parish and will be expected to meet the best value objectives, which is why the obligations referred to by the hon. Member for New Forest, West are included.

The Government have decided that such bodies should receive financial assistance in the form of a £30,000 grant, which, in response to another question from the hon. Member for Poole (Mr. Syms), will be a fixed, not a variable, sum. Once the powers are introduced, that will be paid every year from now on to parish councils that qualify because of the size of their annual budgets.

Geoffrey Clifton-Brown (Conservative, Cotswold)

Is the Minister saying that, under the current criteria, only 41 councils qualify?

Nick Raynsford (Labour, Greenwich and Woolwich)

Yes.

Geoffrey Clifton-Brown (Conservative, Cotswold)

Will he say how many more expect to qualify and how much money he has put aside to cover the project for the next three years?

Nick Raynsford (Labour, Greenwich and Woolwich)

With the best will in the world, I was coming to that, but I was answering the questions of hon. Members who spoke first.

The key point is that there are specific provisions for authorities whose budgets meet the criteria. Therefore, there is no scope for capricious use of ministerial discretion. The money will be a helpful addition to the income of those authorities to help them meet the obligations of best value and to deliver efficiently to their local communities. As the hon. Member for Cotswold rightly said, there are 41 such

authorities. Although he highlighted the variations in size of parish councils generally, he will appreciate that the provision applies only to larger ones that have significant budgets. It is in everyone's interests that proper provisions should be put in place for organisations that are dealing with substantial amounts of money; more than £500,000 a year. I hope that that deals with the hon. Gentleman's point about parish meetings, which might technically be eligible. They would not quality unless their budgets were of the size that I mentioned. It is a far-fetched scenario that a parish meeting covering a small area would qualify as a best value parish.

The hon. Gentleman asked how much money had been set aside for grant. The answer is about £1.2 million in each of the three years. On the basis of recent trends, we do not anticipate any significant variation, but there will be some adjustment and we will therefore be prepared to make additional grant available if other parishes become eligible.

Robert Syms (Conservative, Poole)

I presume that the definition of income concerns revenue income. One occasionally hears about small parish councils selling playing fields for housing and generating considerable capital receipts. That does not happen very often, but there are occasions when a few parish councils end up with small pots of money. Would those parish councils qualify if they raised £500,000 from the sale of a relatively small piece of land? If the Minister does not have an answer now, perhaps he could let me know in writing.

There is a category of local authority called chartered trustees, which followed reorganisation in the 1970s. Is a town run by chartered trustees—they may have a large budget—wholly excluded from the Bill?

Nick Raynsford (Labour, Greenwich and Woolwich)

I shall give the hon. Gentleman a written reply to his detailed question, but I can make it clear to him that the provision is designed to meet the costs of authorities with significant revenue budgets. It is not designed to encompass large, one-off capital transactions, which may occur in individual cases.

The hon. Member for Cotswold asked whether the assessment was on a regional basis. The answer is no because the criteria apply to budget size rather than to any other factors. He also asked whether best value parishes are discharging extra duties. In some cases the answer is yes because they have agreements with their local district councils to discharge certain local functions. He rightly highlighted that those arrangements are often advantageous because they ensure an input from small, local communities, which is to be encouraged. The agreements are between two tiers of local government—the district and the council—and I expect them to continue.

Where there are relatively large unitary authorities, whether they were created when the Conservative party was in government or by the Government's regional government proposals—I made this clear at the meeting of the Association of Larger Local Councils a few months ago—I would expect to see more scope for devolution. It is important that people

are locally in touch with services, and an effective parish council is a good way to achieve that.

Geoffrey Clifton-Brown (Conservative, Cotswold)

It seems to be the trend that smaller parish councils are encouraged to work together. Under the proposals, is there a possibility that two or three councils could aggregate their budgets and functions to qualify for the best value grants?

Nick Raynsford (Labour, Greenwich and Woolwich)

The arrangements apply to existing parishes. If there were a proposal for an amalgamation of parishes into a new parish, we would look at the criteria. However, it is not possible for an administrative arrangement to be reached to enable a group of parishes to get through the barrier. The purpose of the £30,000 is to enable those authorities to discharge the responsibilities imposed by the best value regime, which is rightly all about ensuring proper auditing and observing respect for the proprieties of public office.

That brings me to the hon. Gentleman's point about the resignation of parish councillors, of which there have been some. I understand from the standards board that some parish councillors have not felt able to sign the basically straightforward undertakings to comply with the standards that apply to all people in public life, whether they are at parish council level, our level or local authority level. The standards board is an extremely thoughtful body that is approaching its responsibilities in a sensible and practical way. It advises me that there is nothing unreasonable about the application of those standards to parishes, which, as the hon. Gentleman will recognise, can take responsibility for substantial sums of money. Their budgets can be larger than that of a small district council, in which case the borderline between a parish council and a district council simply does not justify a different code of conduct.

Andrew Turner (Conservative, Isle of Wight)

Does the Minister agree that some of the requirements imposed by the standards board appear to be intrusive and disproportionate, particularly for very small parish councils?

Derek Conway (Conservative, Old Bexley and Sidcup)

Order. Before the Minister is tempted too far into the subject of probity, I hope that he will address his remarks to the clause, as we are not dealing with the requirement at present.

Nick Raynsford (Labour, Greenwich and Woolwich)

Thank you, Mr. Conway. I shall say a very brief no to the hon. Member for Isle of Wight to indicate my view, which I have already set out in response to the questions raised by the hon. Member for Cotswold. I shall not stray further into that territory.

We all believe that probity and honesty in public life are fundamental. It is right that all authorities should meet such obligations, and parish councils are not exempt. The provisions encourage and assist authorities to meet high standards of organisation and probity. I commend the clause to the Committee.

Question put and agreed to.

Clause 36 ordered to stand part of the Bill.

Clause 37 - Best value grant: communities

Don Touhig (Labour/Co-operative, Islwyn)

Clause 37, which applies to Wales, provides for the National Assembly of Wales to pay a grant to best value community councils that are subject to any best value duties for expenditure that they incur. By virtue of the Local Government (Best Value) (Exemption) (Wales) Order 2000, at present no council meets the criteria for being subject to any of the best value duties in sections 3 to 6 of the Local Government Act 1999.

However, that may change. The Assembly has commissioned a research project to be carried out by the University of Wales at Aberystwyth into the role and responsibilities of community councils. It may result in some community councils taking part in the Wales programme for improvement, which is an in-depth assessment by each authority of its fitness to achieve continuous improvement across all its functions. The Wales programme for improvement is based on the best value duties in the 1999 Act.

Clause 37 permits the payment of grant to best value authorities, which are defined in subsection (1) as community councils that are subject to the best value duties set out in sections 3 to 6 of the 1999 Act. There is no requirement for Treasury consent, as the Assembly sets its own Budget.

Andrew Turner (Conservative, Isle of Wight)

I should like to explore some of the types of information that the National Assembly for Wales might seek to obtain under the provisions of the clause. It may be difficult to envisage that in the context of a regime under which no best value requirements are placed on any parishes or communities in Wales. However, can the Under-Secretary indicate whether the information that a community council may be required to provide is limited to that which it has obtained in connection with best value purposes? Or might it extend beyond such purposes to information that it might perhaps have acquired for other purposes; or, indeed, that it might not have acquired had it not been for the desire to obtain the grant that is or might become available under the clause?

Let me give the Under-Secretary some examples. Is it the intention of the Assembly to obtain information about the linguistic make-up of communities in Wales, the languages spoken by people buying houses or the ethnic origin of people in Welsh communities? Is it intended that the Assembly can require community councils to use the grant in such a way as to either distort or maintain the ethnic or linguistic composition of particular communities in Wales? Is it within the power that will be conveyed by the clause for a community council to make grants to schools or rural post offices? For example, in Cardiganshire there is argument about whether new houses should be built in its communities because they may be purchased by incomers who being more likely to be English than Welsh, would distort the balance between Welsh and English speakers. The contrary arguments are that the houses should not be built, in which case the viability

of local services, such as post offices and schools, would be reduced, or that the houses should be built only on condition that they are occupied by people who speak Welsh. Is it within the powers of the clause for the National Assembly for Wales to require that the grant be spent in any of those ways?

Don Touhig (Labour/Co-operative, Islwyn)

No.

Question put and agreed to.

Clause 37 ordered to stand part of the Bill.

Clause 38 ordered to stand part of the Bill.

Clause 39 - Emergency financial assistance

Geoffrey Clifton-Brown (Conservative, Cotswold)

I have a simple, short question to ask the Minister. Is it envisaged that the clause could be used in any way to pay combined fire authorities that are out of pocket, as a result of the present firemen's dispute?

Nick Raynsford (Labour, Greenwich and Woolwich)

No.

Question put and agreed to.

Clause 39 ordered to stand part of the Bill.

Clause 40 - Loans by Public Works loan commissioners

Geoffrey Clifton-Brown (Conservative, Cotswold)

I beg to move amendment No. 112, in

clause 40, page 17, line 39, after 'appropriate', insert 'by order'.

Derek Conway (Conservative, Old Bexley and Sidcup)

With this it will be convenient to discuss

Amendment No. 113, in

clause 41, page 18, line 23, after 'appropriate', insert 'by order'.

Geoffrey Clifton-Brown (Conservative, Cotswold)

I fear that the habit of brief questions and answers will come to a short stop now.

Desmond Swayne (Conservative, New Forest West)

Shame.

Geoffrey Clifton-Brown (Conservative, Cotswold)

No doubt my hon. Friend would prefer to debate the entire Bill in one sitting and go home. Sadly, the Committee would not be seen to be doing its job if we did that.

The clause refers to overhanging debts and some large sums. In a written answer to me, the Parliamentary Under-Secretary of State, Office of the Deputy Prime Minister, the hon. Member for Harrow, East (Mr. McNulty), said that, under the clause, the

''Provision for 2003–04 is currently £616 million.''

In last Thursday's proceedings of the Committee, my hon. Friend the Member for Runnymede and Weybridge (Mr. Hammond) quoted a figure of £800 million for the same year. That is some difference. Will the Minister clarify what figure is involved?

To set the matter in context, we know that some significant sums have already been paid in writing-off overhanging debt in relation to housing stock that is transferred, when debt has been accrued that is larger than the proceeds from the transfer. Some large payments have been made almost exclusively to

metropolitan boroughs. For example, I was told in a written answer that, in 1999–2000,

''£20.99 million was paid to Burnley. In 2000–01 payments were made to Coventry (£111.68 million) Calderdale (£64.59 million) and Blackburn with Darwen (£78.9 million). In 2002–03 payments have been made to St. Helens (£87.2 million), Redcar and Cleveland (£25.4 million) and Knowsley (£126.13 million).—[Official Report, 3 December 2002; Vol. 395, c. 707W.]

Large sums of debt are being written off. That is why amendments Nos. 112 and 113 would be appropriate. Subsection (1) states:

''The Secretary of State may, if he thinks it appropriate, make payments to the Public Works Loan Commissioners so as to reduce or extinguish such debt (whether then due or not) of a local authority in England to those Commissioners as he thinks fit.''

It seems to me that when one is dealing with such an important matter and with such large sums, payments should not be just at the whim of the Secretary of State; they should be made by order, which would be subject to parliamentary scrutiny. I look forward with interest to the Minister's explanation and to him clarifying what sums he has laid out in his budget.

I fully understand that that will depend on which authorities succeed in making a stock transfer. Nevertheless, in line with the previous Government's policy, the Government are seeking to encourage local authorities to make stock transfer to registered social landlords. Presumably, they are using the provisions to encourage that transfer. It would be interesting to hear from the Minister how much he expects that to cost, and for how many more authorities such huge sums are in the pipeline.

Desmond Swayne (Conservative, New Forest West)

The Government are seeking not only to encourage stock transfer but to encourage housing authorities to maintain their housing stock. What concerns me, particularly in relation to the lack of transparency referred to by my hon. Friend, are the perverse incentives that may arise from those payments and to which the Select Committee drew our attention.

I already know of the difficulty caused by the failure to maintain the standard of the stock. My local authority is currently prevented from spending its resources in the acquisition of additional affordable housing, which is desperately needed, by the requirement imposed by the Minister that it use those resources to maintain the existing stock. It is quite right that the existing stock should remain at a high standard. My authority is a beacon authority that has maintained its stock very well for many years.

The policy, entirely appropriate as it may be to an authority that has not maintained its stock properly so that much of it has become uninhabitable, affects us disproportionately hard and prevents us from meeting local need. The Select Committee drew attention to what it regards as a perverse incentive in the arrangements for the maintenance of stock. I cite paragraph 31 of the Select Committee report, and the evidence given by the Chartered Institute of Public Finance and Accountancy:

''The 'playing field' is not level and taxpayers' money is being used in a discriminatory fashion. There is also a measure of 'perverse incentive' in the proposal as it benefits authorities that have not

maintained their housing stock in the past to a standard where the market value exceeds the historic debt.''

I ask the Minister to provide some reassurance as to why the criticisms levelled by CIPFA in its evidence to the Select Committee hold no force.

Brian Iddon (Labour, Bolton South East)

I find the hon. Gentleman's whinging rather extraordinary. For 10 years, I was the chairman of housing in a metropolitan authority, and I can tell him that under his Government we had a 70 per cent. cut in housing finance. How can he expect metropolitan authorities to maintain their stock after such swingeing cuts?

Desmond Swayne (Conservative, New Forest West)

It is entirely appropriate that Government policy should be designed—as the policy imposed on New Forest district council was—to encourage authorities to maintain their stock. I am complaining that one size does not fit all. Authorities that may not have been labouring under the disadvantage so keenly felt by the hon. Gentleman's authority, and which were able to maintain their stock, will now have imposed on them a policy that prevents them from acquiring additional stock. That policy requires them to tear out perfectly good kitchens and put in new ones, instead of building new houses for people who are in desperate housing need.

Robert Syms (Conservative, Poole)

Although the explanatory notes on clauses 40 and 41 concentrate purely on housing stock transfers, the Bill does not say that clause 40 is limited to such transfers. Are there any circumstances other than the issue of stock transfer in which the clause might be used? As the Bill stands, there is no limitation on the power, and it could well be used to write off a local authority debt that has nothing to do with stock transfer or a housing issue.

Nick Raynsford (Labour, Greenwich and Woolwich)

Clause 41 follows a similar pattern to clause 40, but relates to loans from bodies other than the Public Works Loan Board. Clauses 40 and 41 allow the Secretary of State to assist one or more English local housing authorities to meet debt liabilities through a payment direct to either the public works loan commissioner or the local authority on the condition that it is transferred to a non-PWLC lender. Amendments Nos. 112 and 113 would require the Secretary of State to make an order before making such a payment. Clause 117(4) requires such an order to be made by statutory instrument.

The requirement to make an order before a payment can be made could prove highly problematic and may prevent the Secretary of State from paying the correct amount in respect of authorities' overhanging debt following a housing stock transfer. I shall briefly explain. The amount of overhanging debt that the Secretary of State would repay is known only at the very last moment when the housing stock transfer takes place. As a minimum, the rate for new loans from the PWLB is reviewed weekly, with any change impacting on local authorities' debt redemption premium, and therefore on the level of an overhanging debt payment. If the amount had to be specified in an order that would have to be laid before Parliament at least 21 days before coming into force,

the debt repayment specified in the order may not be the amount of overhanging debt that needed to be repaid. The payment specified in such an order may be either insufficient, leaving the authority with outstanding debt, or excessive.

We would be unable to consent to the transfer if the order had not been made before the transfer, as the authority would be unable to meet its housing debt obligations and would remain eligible for housing revenue account subsidy. The purpose of clause 40 is to remove that possibility, as we believe that it is inappropriate for an authority with no housing to receive ongoing housing revenue account subsidy. That is the key point to which we have already referred.

I repeat that there is no question of different treatment for different authorities. Those authorities that continue to hold housing stock will continue to qualify for subsidy. The procedures in the clause to allow overhanging debt to be written off avoid the nonsense of subsidy being paid to a local authority that no longer has any stock, but has debt because the amount that it received from the sale was less than the outstanding debt. The provisions are a purely practical arrangement designed to cover those circumstances.

I should tell the hon. Member for New Forest, West that authorities that get more from a transfer than the amount of outstanding debt will be free to retain that debt, and there is no change to the relevant provisions, as I made clear when we debated the pooling arrangements last week. We are talking not about preferential treatment, but a sensible arrangement to cope with the practicalities of transferring stock and dealing with overhanging debt. Such debts exist, and I am quite open about this, predominantly in metropolitan authorities that often have much larger debt burdens. The value of the stock is often less is such authorities, and the chance of covering the outstanding debt through the receipt is therefore smaller than in more affluent areas.

The hon. Member for Cotswold asked about the figures, and I can confirm that those that he gave for authorities were broadly right. Some £532.9 million has already been applied to write off overhanging debt, and possible further such debt payments are expected during the next couple of months in respect of Bradford and Walsall. Beyond that it is difficult to forecast, because the whole process depends on tenant votes, and if tenants voted not to transfer, any figures that I gave would be wildly out of line. The hon. Gentleman also referred to estimates. Obviously we have to make provision for such requirements, but the actual sums allocated are those that he quoted, and I can confirm those for individual authorities. I hope that I have satisfied the Committee that the arrangement is sensible.

The hon. Gentleman referred to openness, transparency and scrutiny of those substantial sums of money. We make all the figures public, and, from 2002–03, overhanging debt payments, which were originally recorded in the Treasury's annual accounts, will be recorded in the annual accounts of the Office of the Deputy Prime Minister. Payments will therefore be open to the scrutiny of Parliament and the

National Audit Office. Were any payments to be made by the National Assembly for Wales, they would be shown in the Assembly's accounts, so there is no question of secrecy, and there is proper provision for scrutiny of the sums. I hope that the hon. Gentleman will agree to withdraw the amendment.

Geoffrey Clifton-Brown (Conservative, Cotswold)

The Minister's explanation was helpful to the Committee. I still think that the procedure is for ministerial convenience. I do not accept the right hon. Gentleman's explanation that it would not be possible to have an order for each payment of overhanging debt. That is commonly done if the precise sum is not known when the order is passed, but the order would make provision for the sum and an estimate would be given. There is a perfectly good mechanism in this House for doing that. Having said that, we have explored what the clause does. Whether or not one agrees with the huge payments, I do not accept the Minister's explanation, but I will not ask my hon. Friends to push the matter to a vote. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Derek Conway (Conservative, Old Bexley and Sidcup)

It seems clear to me that the chances of reaching clause 73 in the next hour are reasonably remote, so I intend to suspend the sitting for a maximum of five minutes, to allow the usual channels to decide whether they want to address that issue or to make progress.

Sitting suspended.

On resuming—

Ordered,

That the programme resolution of 30 January be amended, in

the table, in column 3, leave out '11.25 am at 7th sitting'.—[Mr. Woolas.]

Geoffrey Clifton-Brown (Conservative, Cotswold)

On a point of order, Mr. Conway. The Committee has made a sensible move. Clearly, whatever one thinks of programme motions, when debates in Committee take longer than expected—and the Programming Sub-Committee can never know how long a debate will take—it makes sense to have a sensible, quick procedure, such as we have had. I thank you for that, Mr. Conway, and I thank the Minister for facilitating it.

Derek Conway (Conservative, Old Bexley and Sidcup)

I am grateful to the usual channels for facilitating that.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

I beg to move amendment No. 87, in

clause 40, page 17, line 41, leave out 'a' and insert 'each'.

Derek Conway (Conservative, Old Bexley and Sidcup)

With this it will be convenient to discuss the following amendments:

No. 88, in

clause 40, page 18, line 3, leave out 'a' and insert 'each'.

No. 89, in

clause 40, page 18, line 20, at end add—

'(6) When the Secretary of State or the National Assembly of Wales makes a payment specified under subsection (1) or subsection (2) the Secretary of State or the National Assembly for Wales shall

not reduce or extinguish such debt disproportionately between authorities.'.

No. 90, in

clause 41, page 18, line 22, leave out 'a' and insert 'each'.

No. 91, in

clause 41, page 18, line 26, leave out 'a' and insert 'each'.

No. 92, in

clause 41, page 19, line 6, at end add—

'(8) When the Secretary of State or the National Assembly of Wales makes a payment specified under subsection (1) or subsection (2) the Secretary of State or the National Assembly for Wales shall not reduce or extinguish such debt disproportionately between authorities.'.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

The amendments follow on from a comment that the Minister made during the previous debate, when we were discussing other amendments related to the clause, and how the Government will pay overhanging debt. The amendments seek to probe the Government's position. In the Select Committee hearings and the Government's response, a question arose as to whether the clause would enable stock transfer authorities to be treated in the same way as local authorities. In other words, were the Government providing a financial incentive to council tenants to vote for a stock transfer instead of rejecting such a proposition? The issue is significant, because if the Government were to create an extra incentive, they would be making a fairly uneven playing field even more uneven, with respect to those significant decisions for many of our constituents.

The Select Committee considered the draft Local Government Bill, and subsequently a note was submitted to the Select Committee from the Office of the Deputy Prime Minister, in which, I understand, the Minister for Housing and Planning, Lord Rooker, wrote about the issue. To make the matter concrete, some people allege that the debt repayment is of such a size that it would outweigh the continuing payments from central Government to those who remain in local authority tenure through the housing revenue subsidy system. There was a question about whether those two offset, and whether council tenants, through their rents or council tax, would still be paying for part of servicing the debt.

When the Government replied to the Select Committee's point, they said:

''It has been suggested that the repayment of overhanging debt following a large scale voluntary transfer to a housing association represented a financial incentive to transfer. This is not the case. Before the transfer the Housing Revenue Account subsidy system takes into account the full cost of servicing the authority's housing attributable debt: there is no net burden on the authority. The repayment of the outstanding debt following transfer ensures that this continues to be the case.''

That is the Government's position. I have tabled the amendment to probe that, because it is not the view of CIPFA, a significant, authoritative, independent, accounting body that studies public finance. CIPFA has a different view from the Minister, and in giving evidence to the Select Committee it said:

''Points about transparency, equity and fairness can be made concerning the draft Bill's proposals for the Government to pay off 'overhanging debt.' . . . From the perspective of the tenant who remains with the local authority, part of their rental payment services the historic housing debt''.

There is a difference of view that needs to be clarified, because the sums are significant, as the hon. Member for Cotswold said. Is a financial incentive being created? Is CIPFA right that council tenants' rents actually go towards servicing some of the historic debt, or are all the costs of serving that historic debt met through the housing revenue account subsidy system? Although the memorandum that the Office of the Deputy Prime Minister submitted to the Select Committee alleges that, it provides no financial models or figures to back that up. In answering the debate, I hope that the Minister can provide those figures. If he cannot, I hope that he will provide the financial modelling and the figures to myself and other members of the Committee in writing, because there are two different opinions. If the Minister is right that a level playing field will remain and council tenants will not be penalised if they do not vote for the stock transfer, all sides can be relaxed. However, if there is any element of subsidy, there will be a matter of policy debate that should concern us. The Minister nods—I am sure that he takes the point, and I hope that he will give the reassurances that I seek.

Nick Raynsford (Labour, Greenwich and Woolwich)

Clauses 40 and 41 give the Secretary of State the discretion to assist either an individual, a number of, or all English local housing authorities to meet debt liabilities through a direct payment either to the public works loan commissioner or to the local authority on condition that it is transferred to another lender. No amendment is required to allow the Secretary of State or the National Assembly for Wales to make payments. The policy driver for clauses 40 and 41 is to assist authorities that transfer their housing stock to a registered social landlord but which need assistance to meet outstanding housing debt liabilities where the receipt is insufficient. These amendments appear to be based on the misunderstanding that we are giving favourable treatment to authorities that transfer their housing stock and for which we make an overhanging debt payment. That is not the case. I listened carefully to the comments of the hon. Gentleman and I will respond to them in detail.

All authorities are treated fairly. It is, however, for a local authority to choose whether it wishes to retain or to transfer its stock based on a rigorous option appraisal that involves tenants and other key stakeholders. If an authority or its tenants choose to retain its stock, the Government, through the housing revenue account subsidy, continues to ensure that a local authority can meet the cost of servicing its housing-attributable debt. As the hon. Member for Kingston and Surbiton will know, under the Government's rent restructuring proposals there will be in the long term a formula to guide rent policy to ensure greater consistency between the rents applicable in the case of local authorities and those of registered social landlords. In the past, there were often marked and incomprehensible variations that the public found difficult to understand and which created genuine fears and anxieties about fairness.

The point that CIPFA raised is true in that some of the tenants' rent will contribute through the housing revenue account towards all the costs that an authority incurs. However, it is not the case that as a result of voting to remain with the local authority, tenants will automatically be giving themselves a less favourable rent position than if they vote for a stock transfer. Indeed, it is often the case that when tenants vote for a stock transfer they encounter significant increases in rent that are designed to reflect improvements in stock from which tenants benefit.

These are complex matters, but I hope that the hon. Gentleman will understand that we are progressing this in a thoroughly fair and impartial manner and there is no implicit bias.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

Although the Minister describes a very fair situation, he has not yet answered my question. Of course, council tenants' rent will go into the pot to pay for some of the costs. The question is whether they are contributing to the full debt servicing costs. In a supplementary note to the Transport, Local Government and the Regions Select Committee on the draft Local Government Bill, HC 981–111 of Session 2001–02, Ev 103, Lord Rooker said:

''Before the transfer the Housing Revenue Account subsidy system takes into account the full cost of servicing the authority's housing attributable debt''

Is that the position or is CIPFA right when it says that part of the tenants' rent is paying to service the debt?

Nick Raynsford (Labour, Greenwich and Woolwich)

I am reluctant to get into a lengthy discussion on how the housing revenue account works, partly because it is beyond the remit of clause 40, and partly because I am not the Minister responsible for housing. That responsibility falls to my noble Friend Lord Rooker. The hon. Member will know that the housing revenue account is made up of several inputs in the form of rent income, subsidy and other items in certain cases. Housing benefit is not among those inputs. Against that there is expenditure: debt repayment and the costs of managing and maintaining housing revenue account properties. Authorities are required to ensure that their housing revenue accounts balance, but in doing so they must put in place a rent framework that meets that obligation and that is consistent with the Government's policy on rent restructuring. The point that I was making earlier remains entirely valid. A decision whether or not to transfer will not result in a bias that will favour those tenants who transfer to another landlord and disadvantage those tenants who remain with the local authority—or the other way round.

The point that the hon. Gentleman makes is interesting, but it is essentially academic because there is a level playing field. The provisions that we are putting in place will ensure fair and equitable treatment. They will take account of what would otherwise be the total nonsense of continuing to pay housing revenue account subsidy to cover the amount of outstanding debt left over after the receipts from the stock transfer had been taken into account because

there were insufficient receipts to extinguish the entire debt.

That problem prevented many metropolitan authorities from considering stock transfer before the policy was introduced, and we believe that it is right that the option should be available to all authorities and not enjoyed only by those that happen to be in the advantageous position of having relatively high capital values and relatively low outstanding debt. That is why, in the early stages of stock transfer, it was mainly southern and more affluent authorities that pursued the programme, and why other areas of the country were not able to do so.

We now have a much more level playing field, and it is now possible for a number of authorities to explore that option, which was previously denied them. They include metropolitan authorities from the midlands and the north, such as Burnley, Coventry, Calderdale, Blackburn, St. Helens, Redcar and Cleveland, Knowsley and Carlisle. That is the purpose of the policy, and I hope that the hon. Gentleman recognises that it is fair and equitable.

Geoffrey Clifton-Brown (Conservative, Cotswold)

The hon. Member for Kingston and Surbiton must be on to something, because those are pretty hefty incentives for authorities to want to get rid of their housing stock. In order that those payments are not seen to be arbitrary, will the Minister confirm that wherever a stock transfer takes place and there is overhanging debt, he will make such a payment?

Nick Raynsford (Labour, Greenwich and Woolwich)

I confirm that it has been our policy to do so in every case that has applied so far. What I cannot do, however, is to give an absolute undertaking of the sort asked for by the hon. Gentleman because of the process of negotiation, of which valuation is a part. Were I to say that we would automatically pick up the amount that was left as a result of the process, authorities would have no incentive to try to get the best possible value and price for their assets in order to minimise any outstanding debt; and, in some cases, to extinguish it altogether. I cannot give the hon. Gentleman the absolute guarantee that he requires, because it would not be prudent, but I assure him that we have applied the policy consistently in the past whenever debt is left after the transfer calculation has been made.

I hope that I have given the hon. Gentleman the assurance that he seeks. I hope that the hon. Member for Kingston and Surbiton, having reflected on the matter, now recognises that it would not be appropriate to press the amendments. They would have the entirely bizarre consequence of requiring all debt to be extinguished simultaneously—including debts in authorities that had perfectly acceptable and continuing arrangements in place—if the authority had no intention of transferring its stock but was perfectly happy to continue to hold its stock and to operate within the current arrangements. There would be no purpose in going through this process in such cases, and I hope that he will agree to withdraw the amendment.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

The amendments were useful to probe the Government's position. I, for one, certainly did not

find it convincing. The Government's proposals would give a massive incentive and a massive subsidy, which would encourage councils to transfer their stock and to vote for that proposition.

The Minister spoke of a level playing field between different regions. That is not the level playing field that we seek; we want a level playing field on the decision whether it is in the financial interests of council tenants to vote for or against a stock transfer proposition. My concern is that, despite the Minister's warm words—he was beginning to hide behind the complexities of the housing revenue account—such an incentive will exist, and it will be increased by the clause. I do not think that he was able to provide any evidence to back up the claim in Lord Rooker's note to the Select Committee that the housing revenue accounts system takes into account the full cost of serving an authority's housing. CIPFA had it right. Complex calculations might be involved because different authorities have different histories. I accept that. It is possible to imagine a situation in which a local authority will not have any incentive because the system will work in the reverse way to that which I am suggesting. All that that goes to show is what a mess it is, and how unfair the payments are. It is, as CIPFA said, indiscriminate use of taxpayers' money.

I shall not press the amendment to a vote, but I believe that we must return to the issues. If the Government want to spend a lot of taxpayers' money to promote a discriminatory housing policy, they should have the courage of their convictions and say so, instead of hiding behind complex proposals that do not receive the scrutiny that they deserve. I hope that my hon. Friends and I will return to the matter on Report. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Question proposed, That the clause stand part of the Bill.

Geoffrey Clifton-Brown (Conservative, Cotswold)

I do not want to labour the clause although it is an important one and involves a lot of money. I entirely agree with the hon. Member for Kingston and Surbiton. At a time when shire counties' council tax increases are going into double figures, huge amounts of money are being redistributed to authorities that have not been well run in the past. That is an interesting use of taxpayers' money.

The types of authority whose debts can be repaid are listed in subsection (5). The commissioners can, under subsection (3), decide to extinguish the debt—we have been discussing that all morning—or reduce it by an amount to be determined by them. In other words, the payment does not have to repay the entire debt; it can pay part of it. It is in the gift of the commissioners to decide. As they are a public body, how independent are they? Or will a little direction from the Secretary of State tell them whether to extinguish the entire debt or part of it? It is another arbitrary part of an arbitrary procedure.

The explanatory notes say that the public works loans commissioners may decide what premium is required in a case in which long-term fixed interest is

higher than the commercial rate at which the authority could borrow. Is that not a recycling of public debt? The commissioners are asking for a premium that the Government are going to write off, as they will write of the total debt of the Public Works Loans Board. Will the Minister address that?

I have one more technical question. If a debt is extinguished, how does the right-to-buy exclusion work? As I understand it, the right to buy and the right to acquire schemes do not apply where the approved debt on an individual house is more than the proceeds from the right to buy or to acquire. If the total debt of the authority has been written off, presumably the debt of the individual house has been written off. I should be grateful if the Minister confirmed that and answered my other point.

Desmond Swayne (Conservative, New Forest West)

At the risk of exposing my ignorance, can I ask the Minister about subsection (3), under which the commissioners may refuse to accept a payment that the Secretary of State or the National Assembly for Wales proposes to make to them? Why would they do that?

Andrew Turner (Conservative, Isle of Wight)

I should like to delve a little further into the antecedents of these provisions. I am sure that the Minister will be able to explain that it is something that has been going on for a long time under Governments of both parties and is therefore entirely acceptable and it would be foolish of anyone on these Benches to question it. Even if we are perpetuating a wrong that has been done since 1997, or indeed since 1979, that is not justification—

Desmond Swayne (Conservative, New Forest West)

Steady.

Andrew Turner (Conservative, Isle of Wight)

I recognise my hon. Friend's concern because very few wrongs were perpetrated between 1979 and 1997, but there were occasional mild lapses when there was a failure to hold incompetent local authorities adequately to account. Indeed, much of the Bill is based on the requirement of the Minister to hold incompetent local authorities to account.

The mild lapse that I have in mind is the lapse of judgment shown by several local authorities by building up housing stock and failing to maintain it, although it was unnecessary for the authority's purposes. In those circumstances, the national taxpayer must apparently meet a huge debt. We have only to cast our minds in the direction of the Deputy Prime Minister to see the kind of building that has occurred in the constituency of a Member of Parliament. There has been excessive building of public and social housing, which was doubtless supported by Government grants and sometimes by massive capital receipts. However, such housing was not needed by local people when it was built and was certainly not needed after it was built. If such housing is left to go to rack and ruin, the only available route for a local authority is to undertake a large voluntary transfer and to try to remedy the situation by shrugging off the responsibility that it chose for itself. However, that is done at the expense of the constituents of my hon. Friend the Member for New Forest, West, for example, and doubtless the

constituents of right hon. and hon. Members throughout the country.

Writing off debt is not cost free; it is done at somebody's expense. The Bill admits that, but not very clearly. Writing off debt is done at the expense of the national Exchequer, to which many people contribute more than they can afford. The level of taxation in this country continues to rise. Much money is directed in the wrong way and wasted. The provision is a further example of money being wasted to overcome a problem that local authorities have chosen for themselves.

Nick Raynsford (Labour, Greenwich and Woolwich)

Several points have been raised and I shall try to cover them as I respond. I thought that the opening remarks made by the hon. Member for Cotswold were most unfortunate. I am sure that Conservative councillors in Carlisle will not be pleased to hear his remarks about the management of their housing. Carlisle city council is one of the authorities that transferred its stock and received the benefit of overhanging debt. Councillors on Blackburn with Darwen borough council, which was recently identified as one of 22 excellent authorities in the country, will equally feel extremely upset by his unjustified disparaging remarks about local authorities.

The clause will create an express power for the Secretary of State and the National Assembly for Wales to make payments to public works loan commissioners to repay local authority debt. Subsection (1) provides for the Secretary of State to make a payment if he thinks it appropriate in order to reduce or extinguish a local authority's debt. The term ''reduce or extinguish'' is used because writing off the debt might remove all debt owned to the Public Works Loan Board in some cases. However, there will be other cases when the authority has debt other than that relating to only the housing transfer, and it would be inappropriate to extinguish all the debt. The term reflects the circumstances of each case.

The hon. Member for Cotswold will appreciate that there are safeguards to enable the sum to be properly determined and to recognise the independence of the public works loan commissioners. There is a parallel provision in Wales, on which I will not linger.

Subsection (3) contains a provision for the commissioners to determine the amount of payment that is required to extinguish or reduce a debt, which should give the hon. Member for New Forest, West the reassurance that it will not be an arbitrary figure chosen by the Minister. The commissioners will decide the appropriate amount, and subsection (4) acknowledges their independence by providing that they may refuse to accept a proposed payment. Clearly, we hope that that will not happen and that our discussions will usually ensure agreement, but they are an independent body, and we cannot insist that they accept our payment proposals.

The clause will not have any added public expenditure or manpower implications in England and Wales. As the hon. Member for Cotswold recognised, it effectively recycles public debt. The

hon. Member for Isle of Wight asked about the valuation. Valuation assumes a rental income over 30 years for each house and expenditure over a full 30 years. The valuation also takes account of the long-term arrangements, including any potential right-to-buy receipts.

I hope that those explanations deal with the points raised by hon. Members and that the clause will stand part of the Bill.

Geoffrey Clifton-Brown (Conservative, Cotswold)

The Minister failed to answer my question about the recycling aspect and the premium that will have to be paid for a high-interest loan. We take it that he has no answer, and that it is merely recycling.

The Minister sailed into an uncharacteristic, politically partisan pose when he said that I accused northern Conservative-run authorities of being badly run. It is necessarily not right that, because it has gone into debt, the housing function of a local authority has been badly run, but we know of instances of Labour-controlled authorities—Liverpool under Derek Hatton, for example—that have got themselves into huge debts because they were grossly inadequately run.

The clause is unfair. Why should capital receipts from well-run and debt-free authorities be pooled, when the debts of highly indebted authorities are being written off anyway? Are we not just robbing Peter to pay Paul when the Government have already paid Paul? I will urge my colleagues to vote against this arbitrary and unfair clause, which gives a huge incentive to highly indebted housing authorities to transfer their stock for someone else to run. They should do a better job in the first place.

Desmond Swayne (Conservative, New Forest West)

I acknowledge that the Minister addressed my question, but he did not answer it. Is he suggesting that the board is under the same constraints as a bank would be in determining the nature of its loan book and perhaps resisting the customer's determination to pay off their mortgage early? Is it the same sort of provision?

Nick Raynsford (Labour, Greenwich and Woolwich)

Yes.

Question put, That the clause stand part of the Bill.

The Committee divided: Ayes 13, Noes 6.

Clause 41 - Payments towards local authority indebtedness

Andrew Turner (Conservative, Isle of Wight)

I should like to assume that many similar points would have been made in debating this clause as were made during the debate on clause 40. I make that presumption in order to save time, but hon. Members may wish to intervene if it is untrue.

I wish to return to some of the answers that the Minister gave to some of the questions that were asked about clause 40 and to apply them to clause 41. I thank the Minister for the good answers that he directed to me on the income stream, even though they were answers not to my questions but, I suspect, to those of my hon. Friend the Member for New Forest, West.

In order to save time, I will not repeat my speech on clause 40, but I ask the Minister to go back over it and to assume that it was made in reference to clause 41. I wish him to explain how local authorities have got themselves into a position where they need to have debts written off. I understand the more recent history of that topic. My hon. Friend the Member for Cotswold referred to local authorities—some of them are Conservative-controlled councils—that have large debts because they have recently taken control of hitherto badly run local authorities, and my hon. Friend the Member for New Forest, West mentioned other local authorities that have failed to invest sufficient sums in the maintenance of their capital stock. Can the Minister tell me whether these authorities have a history of either having a large surplus or a particularly badly maintained public housing stock which has led them to need—or to feel that they need—to transfer the stock with a large overhanging debt? I ask that because I have a genuine desire for more information on it. Can he give the Committee additional information on why this clause might be necessary, in the context of the remarks I made in the previous debate?

Nick Raynsford (Labour, Greenwich and Woolwich)

I am sorry that the hon. Gentleman did not listen more closely to earlier debates, because if he had done so he would know that authorities in areas of low capital value will not have the same opportunity as those in the southern areas to raise large capital sums through the sale of assets. That problem will be compounded if they have also incurred substantial debt that they are still servicing through the need to invest in housing over the years. That is of no relevance to the quality of the management of the stock. Those matters are to do with the market and the cost of providing housing. In some cases, individual authorities have not managed their stock well, and that may be an added reason why they wish to transfer to another body. In other cases, they will have done that very well, but cannot counter the market factors that I have described and which make it impossible for them to gain sufficient sums from the disposal of the asset to write off the outstanding debt.

We have made proper provision to ensure that there is fair treatment for authorities in all parts of the country, irrespective of the capital values that apply in

their areas and of whether the housing stock has been managed well or badly. I hope that the hon. Gentleman will recognise that his anxieties and fears are groundless. This is a sensible provision and I hope that he and other hon. Members will agree that clause 41 should stand part of the Bill.

Question put and agreed to.

Clause 41 ordered to stand part of the Bill.

Clause 42 - Local government finance reports: Wales

Geoffrey Clifton-Brown (Conservative, Cotswold)

I seek your guidance, Mr. Conway. Clause 42 is the paving clause and schedule 2 provides the detail, so would it be in order to debate the two together, even if we have to take any votes separately, if it comes to that?

Derek Conway (Conservative, Old Bexley and Sidcup)

Yes. I should be relaxed about that, if it enables the Committee to make progress.

Geoffrey Clifton-Brown (Conservative, Cotswold)

That is very helpful, Mr. Conway.

Clause 42 is the paving clause, which provides for local government reports for police and other authorities in Wales. Schedule 2 is important because it sets out the entire financing provision made by the Welsh Assembly to each Welsh local authority. I want to ask the Under-Secretary of State for Wales several questions. How will the Welsh Assembly set out its proposals, publish them, pay for them, recalculate them and amend them? The schedule does not appear to include any power of appeal for local authorities, but surely there must be an appeal mechanism or some form of consultation to put right any mistakes made by the Welsh Assembly because it will not get it right in every case. Some mechanism is needed whereby each local authority can make additional representations once the financial settlement has been published. Finally, will bodies have recourse to the High Court for judicial review against decisions of the Welsh Assembly with which they are aggrieved?

Don Touhig (Labour/Co-operative, Islwyn)

Clause 42, which introduces schedule 2, is an important part of the provision in relation to Wales. The Welsh Assembly gave a commitment, in its policy statement on local government freedom and responsibility, to look at ways of continuously improving the publication timetable of local government finance reports. As a former councillor and chairman of a finance committee in my county, I certainly appreciate that.

One of the ways of achieving that policy objective is to provide an option for the Welsh Assembly to produce one report for police authorities and one report for other authorities and bodies. That is because waiting for information about police funding to become available from the Home Office often delays the publication of all authority reports until the end of January. In my experience, that has certainly been the case. That option will meet the Assembly's policy

objective and provide greater certainty and stability for police authorities in Wales.

The hon. Gentleman asked several questions about the provision. In particular, he asked how the budget would be paid for. Of course, the Government provide a block grant to the Assembly, which covers all its expenditure, and, under its own arrangements, the Assembly determines what its budget will be. Each year, the Assembly Finance Minister presents a budget to the Assembly, which is debated and approved by the Assembly in a two-stage process—a preliminary presentation and a final budget—so the whole process is transparent. As in other parts of the country, negotiations take place between local government associations and the Assembly Administration about what support for local authorities should be provided.

On the question of appeals against decisions of the Assembly regarding allocations to local authorities or the police, discussions tend to be ongoing. When I was sitting on the other side, as a local council finance chairman, I was often unhappy with the settlements that were agreed, especially when the hon. Gentleman's party was in power and when one particular Secretary of State held office. We tried to reach agreement, but ultimate responsibility then lay with the Government—it now rests with the Assembly—to determine local government expenditure. There is no formal structure of appeal against decisions of the Assembly.

Geoffrey Clifton-Brown (Conservative, Cotswold)

The only point that the Minister did not answer is whether individual bodies will have the right to go to the High Court for judicial review.

Don Touhig (Labour/Co-operative, Islwyn)

I cannot honestly answer that question. An authority should consider such a review if it feels that it has been unjustly supported or funded by the Assembly at any time.

Geoffrey Clifton-Brown (Conservative, Cotswold)

With respect, the Minister has answered a different question. I asked whether each body would have the right to a judicial review, not whether they should seek one. Will there be a procedure in which they have the right?

Don Touhig (Labour/Co-operative, Islwyn)

There is no provision as far as I am aware, but any authority that feels that it is not fairly and justly treated could obviously take legal advice to determine whether there were any legal mechanisms by which it could appeal against a decision about funding provided by the Assembly.

Question put and agreed to.

Clause 42 ordered to stand part of the Bill.

Schedule 2 agreed to.

Clause 43 - Arrangements with respect to business improvement districts

Valerie Davey (Labour, Bristol West)

I beg to move amendment No. 94, in

clause 43, page 19, line 22, after 'projects', insert 'and services'.

Derek Conway (Conservative, Old Bexley and Sidcup)

With this it will be convenient to discuss the following:

Amendment No. 71, in

clause 43, page 19, line 23, after 'work', insert 'invest'.

Amendment No. 95, in

clause 43, page 19, line 25, after 'projects', insert 'and services'.

Amendment No. 72, in

clause 43, page 19, line 27, at end add

'in relation to a hereditament owned in the business improvement district (''relevant hereditament''); and

(c) where so specified in the BID arrangements, all or part of the BID levy to be paid by property owners, or a class of property owners, with an interest in the relevant hereditament superior to that held by the nondomestic ratepayer (''owners of superior property interests'') on whom the BID levy is imposed.'.

Amendment No. 93, in

clause 43, page 19, line 27, at end add

'in relation to a hereditament owned in the business improvement district; and

(c) where so specified in the BID arrangements, all or part of the BID levy to be paid by property owners, or a class of property owners, with an interest in the relevant hereditament superior to that held by the nondomestic ratepayer on whom the BID levy is imposed.'.

Amendment No. 73, in

clause 48, page 20, line 24, at end insert—

'(1A) Any owners of superior property interests must be described in the BID arrangements

(a) by name of the legal owner of the property interest,

(b) by an address for service of any BID related information, and

(c) by reference to the relevant hereditament to which the superior property interest relates.

(1B) The means of calculating any BID levy to be paid by an owner of a superior property interest must be set out in the BID arrangements and must be an allocated proportion of the BID levy (''allocated proportion'') in respect of the relevant hereditament.

(1C) The BID arrangements must specify the residual proportion (if any) of the BID levy (''residual proportion'') for which the nondomestic ratepayer will be liable.

(1D) The aggregate of the allocated proportions and the residual proportion of the BID levy shall not exceed the amount that would be charged if the BID levy were being paid only by the nondomestic ratepayers.'.

Amendment No. 96, in

clause 48, page 20, line 24, at end insert—

'(1A) Any owners of superior property interests who are to be liable for BID levy for a chargeable period must be described in the BID arrangements—

(a) by name of the legal owner of the property interest;

(b) by an address for service of any BID related information; and

(c) by reference to the relevant hereditament to which the superior property interest relates.

(1B) The means of calculating any BID levy to be paid by an owner of a superior property interest must be set out in the BID arrangements and must be an allocated proportion of the BID levy in respect of the relevant hereditament.

(1C) The BID arrangements must specify the residual proportion (if any) of the BID levy for which the nondomestic ratepayer will be liable.

(1D) The aggregate of the allocated proportions and the residual proportion of the BID levy shall not exceed the amount that would be charged if the BID levy were being paid only by the nondomestic ratepayer.'.

Amendment No. 151, in

clause 48, page 20, line 28, at end insert—

'( ) BID arrangements may specify that the owner of a nondomestic property should be liable to pay a BID levy.'.

Amendment No. 75, in

clause 52, page 21, line 39, at end insert—

'(4A) Where BID levy is to be paid by the owner of a superior property interest for the purposes of calculating A and B the owner of the superior property interest shall be treated as voting in relation to the allocated proportion of the rateable value of the relevant hereditament and the nondomestic ratepayer shall be taken as voting in relation to the residual proportion of the rateable value of the relevant hereditament.'.

Amendment No. 98, in

clause 52, page 21, line 41, at end insert—

'(5A) Where BID levy is to be paid by the owner of a superior property interest, for the purposes of calculating A and B the owner of the superior property interest shall be treated as voting in relation to the allocated proportion of the rateable value of the relevant hereditament and the nondomestic ratepayer shall be taken as voting in relation to the residual proportion of the rateable value of the relevant hereditament.'.

New clause 4—BID: No reimbursement to owner of superior interest—

No. NC4, to move the following Clause:—

'. No owner of a superior property interest shall seek to be entitled to any reimbursement of the allocated proportion from any other owner of an interest in the relevant hereditament other than an interest created after the date on which the BID arrangements come into force.'.

New clause 5—Identification of Land Ownership for BIDs—

No. NC5, to move the following Clause:—

'. A local authority or authorities shall, with respect to a Business Improvement District in their area, provide assistance in identifying the ownership of land within that Business Improvement District, when requested to do so by persons drawing up the BID proposals for that area.'.

Valerie Davey (Labour, Bristol West)

It is a great pleasure to debate business improvement districts at long last. This will probably be a lengthy debate, especially on the first set of amendments because they deal with what many people believe to be the key issue—whether property owners can be included within a business improvement district on a compulsory rather than voluntary basis. The Minister looks worried, but nobody would disagree that property owners should voluntarily be able to be members of a business improvement district. The question is whether they can be forced to be members within the framework adopted by a local bid. The issue has been widely debated.

Amendments Nos. 94 and 95, refer to a separate but clearly related issue. They would insert ''and services'' into clause 43(2). As drafted the Bill suggests that

''The purpose of BID arrangements is to enable . . . the projects specified in the arrangements to be carried out''.

I have spoken to many people involved in drawing up pilot BIDS or thinking of going ahead with BIDS in their areas. They believe that ''projects'' alone is inflexible and may limit the undertakings and ideas that a BID may wish to pursue. In response to this debate, the Minister may wish to clarify whether ''projects'' could include running services. Having that on record would be important to the people to whom I have spoken. If that is not the case, we would wish ''and services'' to be included in the Bill.

There is an economic argument for including property owners in BIDS, and a related business argument. Many property owners would like to be

part of BIDS—the British Property Federation has signed up to the amendments that I have tabled, which are slightly different from the Conservative amendments, although closely related.

There is also a political argument, which I would have thought would be especially worrying to Labour Members. Is it not bizarre that the Government are excluding the property-owning classes from the voluntary tax? I would have thought that Labour Back Benchers would be amused at that prospect. I know that they are getting used to being treated in odd ways by the Government—on House of Lords reform, tuition fees, Iraq and so forth. In the Bill, they are asked to vote against including property owners in the scheme. In due course, they may be surprised to hear their Front-Bench colleagues say, ''Please don't allow property owners to vote to be taxed.'' The Labour party seems to be getting into that bizarre political position.

There is a bureaucratic reason for the Government's drafting of the clause, which excludes property owners. I was given some notes that an official in the Office of the Deputy Prime Minister apparently wrote. They set out 16 reasons why it was impossible to include property owners within business improvement district. I have looked at those 16 reasons; they may be good reasons for a bureaucrat, but they are not good reasons for politicians, for policy makers and for the House of Commons. I shall attempt to refute every one of them.

However, the first issue on which I wish to touch in my opening remarks is the economic reason for a business improvement district and for ensuring that property owners are included. It is very simple: property owners will be the main beneficiaries of a business improvement district. They will see the value of their property rise.

Robert Syms (Conservative, Poole)

Or fall.

Valerie Davey (Labour, Bristol West)

The hon. Gentleman says ''or fall.'' That would mean a failed business improvement district. I make my points as someone who supports the overall thrust of Government policy on the issue. I support business improvement districts; there is a great deal of evidence to suggest that they will be successful in improving areas in our town centres and cities. I am trying to help Government policy through our amendments.

The economic reason for property owners to be included is that they will see the rental value on their property increase. They stand to benefit significantly as a result. Therefore, it seems odd that the Government will not ask property owners to contribute. The business reason that I have sketched out slightly is that representatives of property owners are encouraging the Government to include them in the Bill. However, it is not only the British Property

Federation that is doing so: a range of organisations that represent different forms of business and owners of different types of property have helped to draft our amendments. They have argued their case before the Select Committee and, I understand, in private to the Government. Business is very much behind our amendments.

I make the political case briefly to Labour colleagues that it would be odd to exclude property owners. However, they should be encouraged that those same property owners want to be included in the Bill so that they can pay their fair share.

I mainly want to talk about the bureaucratic issue, with the help of the notes from the Office of the Deputy Prime Minister. Many arguments are being put to Ministers to reject the involvement of property owners. Some of those are practical and some are theoretical. Those arguments should be exposed and dealt with in Committee. It is important that the Under-Secretary and his colleagues think about that. I know from talking to councillors up and down the country that when they face a policy issue on their local authority they often—understandably—rely heavily on the advice of officials. Officers of the council, like civil servants, provide that information. However, that information must be questioned and those arguments tested.

The Ministers in the Office of the Deputy Prime Minister have been exceedingly busy in recent weeks and months. We understand how busy they have been. My suggestion—in the nicest possible way—is that perhaps they have not really had the chance to test the arguments that they have been given in private. Were those arguments tested fully, they would find that they quickly collapse.

The first argument that has been put to Ministers is that the property tax system in the UK is very different from that in the United States. In the United States, property tax is paid by the property owners, whereas the statutory framework in case law in the UK means that the liability for property tax falls on the tenants or the occupiers of a property. That is a core difference that one cannot dispute. The question is whether the Committee should seek to create in the legislation a UK version of the BID system in order to include property owners. I do not think that the difference per se between the UK and the United States should mean that we do not include them.

To return to the officials' concerns, they have apparently told Ministers that to include property owners would require a fundamental shift in the primary legislation that affects uniform business rates, so there is no way that they can be included.

It being twenty-five minutes past Eleven o'clock, The Chairman adjourned the Committee without Question put, pursuant to the Standing Order.

Adjourned till this day at half-past Two o'clock.

Standing Committee A

Clause 43 - Arrangements with respect to business improvement districts

Win Griffiths (Labour, Bridgend)

I remind the Committee that with this we are taking the following:

Amendment No. 71, in

clause 43, page 19, line 23, after 'work', insert 'invest'.

Amendment No. 95, in

clause 43, page 19, line 25, after 'projects', insert 'and services'.

Amendment No. 72, in

clause 43, page 19, line 27, at end add

'in relation to a hereditament owned in the business improvement district (''relevant hereditament''); and

(c) where so specified in the BID arrangements, all or part of the BID levy to be paid by property owners, or a class of property owners, with an interest in the relevant hereditament superior to that held by the non-domestic ratepayer (''owners of superior property interests'') on whom the BID levy is imposed.'.

Amendment No. 93, in

clause 43, page 19, line 27, at end add

'in relation to a hereditament owned in the business improvement district; and

(c) where so specified in the BID arrangements, all or part of the BID levy to be paid by property owners, or a class of property owners, with an interest in the relevant hereditament superior to that held by the non-domestic ratepayer on whom the BID levy is imposed.'.

Amendment No. 73, in

clause 48, page 20, line 24, at end insert—

'(1A) Any owners of superior property interests must be described in the BID arrangements

(a) by name of the legal owner of the property interest,

(b) by an address for service of any BID related information, and

(c) by reference to the relevant hereditament to which the superior property interest relates.

(1B) The means of calculating any BID levy to be paid by an owner of a superior property interest must be set out in the BID arrangements and must be an allocated proportion of the BID levy (''allocated proportion'') in respect of the relevant hereditament.

(1C) The BID arrangements must specify the residual proportion (if any) of the BID levy (''residual proportion'') for which the non-domestic ratepayer will be liable.

(1D) The aggregate of the allocated proportions and the residual proportion of the BID levy shall not exceed the amount that would be charged if the BID levy were being paid only by the non-domestic ratepayers.'.

Amendment No. 96, in

clause 48, page 20, line 24, at end insert—

'(1A) Any owners of superior property interests who are to be liable for BID levy for a chargeable period must be described in the BID arrangements—

(a) by name of the legal owner of the property interest;

(b) by an address for service of any BID-related information; and

(c) by reference to the relevant hereditament to which the superior property interest relates.

(1B) The means of calculating any BID levy to be paid by an owner of a superior property interest must be set out in the BID arrangements and must be an allocated proportion of the BID levy in respect of the relevant hereditament.

(1C) The BID arrangements must specify the residual proportion (if any) of the BID levy for which the non-domestic ratepayer will be liable.

(1D) The aggregate of the allocated proportions and the residual proportion of the BID levy shall not exceed the amount that would be charged if the BID levy were being paid only by the non-domestic ratepayer.'.

Amendment No. 151, in

clause 48, page 20, line 28, at end insert—

'( ) BID arrangements may specify that the owner of a non-domestic property should be liable to pay a BID levy.'.

Amendment No. 75, in

clause 52, page 21, line 39, at end insert—

'(4A) Where BID levy is to be paid by the owner of a superior property interest for the purposes of calculating A and B the owner of the superior property interest shall be treated as voting in relation to the allocated proportion of the rateable value of the relevant hereditament and the non-domestic ratepayer shall be taken as voting in relation to the residual proportion of the rateable value of the relevant hereditament.'.

Amendment No. 98, in

clause 52, page 21, line 41, at end insert—

'(5A) Where BID levy is to be paid by the owner of a superior property interest, for the purposes of calculating A and B the owner of the superior property interest shall be treated as voting in relation to the allocated proportion of the rateable value of the relevant hereditament and the non-domestic ratepayer shall be taken as voting in relation to the residual proportion of the rateable value of the relevant hereditament.'.

New clause 4—BID: No reimbursement to owner of superior interest—

'. No owner of a superior property interest shall seek to be entitled to any reimbursement of the allocated proportion from any other owner of an interest in the relevant hereditament other than an interest created after the date on which the BID arrangements come into force.'.

New clause 5—Identification of Land Ownership for BIDs—

'. A local authority or authorities shall, with respect to a Business Improvement District in their area, provide assistance in identifying the ownership of land within that Business Improvement District, when requested to do so by persons drawing up the BID proposals for that area.'.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

Before the break, I had just begun what may be quite a long debate on business improvement districts and the amendments. I spoke briefly to amendments Nos. 94 and 95 and proceeded to other amendments relating to the role of property owners. Under the Bill, property owners will be outside the formal statutory framework for those who would be consulted, who would be asked to pay and who would formally have to be within a BID. I said that I disagreed with that for four major reasons.

The first reason is economic. Improving the value of the property is the logical consequence of a BID, which benefits property owners. The second reason relates to business. The associations and institutes that represent property owners are in favour of owners being introduced into the statutory framework. Thirdly, there is a political argument in favour of that. It seems rather odd that new Labour wants to exclude property owners from a tax, albeit a voluntary tax—

Andrew Turner (Conservative, Isle of Wight)

You said that this morning.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

I am just rehearsing the arguments for Mr. Griffiths; that is a courtesy. The fourth reason—

Lawrie Quinn (Labour, Scarborough and Whitby)

Surely the hon. Gentleman is not rehearsing—he is repeating.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

I am helping the Chairman.

Geoffrey Clifton-Brown (Conservative, Cotswold)

Does the Liberal party need at least two attempts to get it right?

Edward Davey (Liberal Democrat, Kingston and Surbiton)

No, but we believe in courtesy. I thought that hon. Members who represented constituencies such as Cotswold would understand the importance of courtesy.

The final set of arguments, which I began to deal with and which I shall elaborate on now, are the bureaucratic arguments. I have been given a copy of a document written for the Minister by one of his officials in the Office of the Deputy Prime Minister. It sets out 16 arguments against what we propose. I call those bureaucratic arguments, because when I analysed them with the help of specialists in the property business and all those private sector bodies that have an interest in formulating and developing BIDs throughout the country, they rejected them all and persuaded me that none of them holds water. This debate gives us an opportunity to go through all 16 and knock them down.

Chris Leslie (Labour, Shipley)

I suspect that the hon. Gentleman has a copy of a note that was produced on a fairly informal basis to help discussions with the British Property Federation. I do not think that it was the authoritative advice that was given to Ministers on this matter. It might be useful for him to know that when quoting the document.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

The Minister very helpfully clarifies for the record that the arguments were given to the British Property Federation to argue against including property owners in the business improvement district framework. Clearly, it is a significant document, so it is worth referring to.

Chris Leslie (Labour, Shipley)

I suspect that the hon. Gentleman has the document to which I referred, but I cannot be certain until he reads it out, so we shall wait and see—unless he would like to give me a copy now.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

I will be more than happy to give the Minister a copy in due course.

I was coming to the first major argument, which is that the tax system in the United States—

Geoffrey Clifton-Brown (Conservative, Cotswold)

On a point of order, Mr. Griffiths. I understood that it was a convention in this House that when an hon. Member in Committee referred to any document, that document had to be made available to every member of the Committee. Can I have a ruling on that, and if so, perhaps the hon. Gentleman will make it crystal clear which document he is referring to?

Win Griffiths (Labour, Bridgend)

My view is that the only documents that have to be available to every member are those the Government issue for the purpose of the Committee's work. Mr. Davey is quoting from either a non-parliamentary document or a document prepared in the House but not for this Committee, so it is not covered by that rule. However, I am sure that he would want to make it available.

Geoffrey Clifton-Brown (Conservative, Cotswold)

Further to that point of order, Mr. Griffiths. I do not want to try your patience, but it was my understanding as a long-standing Member of the House that when a document is referred to it should be crystal clear what that document is and that, where possible, it should be made available to all members of the Committee.

Win Griffiths (Labour, Bridgend)

The issue is that when a Minister cites a document to the Committee, that document must be available to the whole Committee, but if an individual member has a document, even from a constituent, it is not bounden on that member to ensure that all members of the Committee have a copy. While Mr. Davey's document might come out of the Government stable, it is not being cited by the Government and therefore it is up to him whether he wishes to circulate it in Committee. Perhaps he should make it clear what the document is.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

The Minister was helpful in attributing the source of the document, and he is close. Perhaps I may help the hon. Member for Cotswold (Mr. Clifton-Brown). I am more than happy to share this document with him or any other member of the Committee. I hope that that shows how helpful I am trying to be.

We were talking about the fact that the tax system with respect to property owners operates differently in the United States. Property tax falls on the property owner in the USA, which is not the case here. The experts I have spoken to who have looked at this argument say that it does not apply for this reason. They believe that the contributions paid to business improvement districts cannot be classified as a tax qua tax. They see it more as a collective investment. Unlike general taxation, which we all pay through VAT, income tax, excise duty and so on, this tax is subject to a vote of the individuals concerned. They can vote on whether they want to pay it. The people I have spoken to suggest that this changes the nature of the tax into more of a levy.

Therefore, although it is based on the ratings system, which without any doubt is a tax, this is a special version. If it had been a supplementary rate, as

the Government had previously proposed, their argument would have helped, but it is not; this is a voluntary tax for the businesses in the community and should be seen not as a tax but as a levy. The advisers who have written this riposte to the Government's advice say that the argument in respect of the USA therefore does not hold. It is unusual that the people who are to suffer this tax are requesting the right to vote to pay it. That changes how the system works.

The second argument that the officials put was:

''There is no political commitment to change the legislation. BIDs rose out of a discussion on the merits of a supplement to the business rate that could be held locally. There is no intention to change the rating system.''

I agree with that, so there is surely no problem. Our amendments to include property owners in a business improvement district require no change to the rating system. The argument that the Office of the Deputy Prime Minister is advancing does not work. Our amendments would make BIDS work by giving local partnerships the option to include property owners, which is a key point. No organisation setting up a business improvement district would be forced to include property owners. Following the enabling nature of the Government's proposed framework, they would simply have the option, taking account of local circumstances. I will come on to that in more detail later.

Patrick Hall (Labour, Bedford)

The hon. Gentleman said that his proposals are for an option, and the wording in amendment No. 93 follows that. However, amendment No. 96, which deals with clause 48, says that business improvement district arrangements ''must'' identify any owners of superior property interests. Will he clarify that point? One amendment says that the inclusion is optional while the other says that it is compulsory.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

I am grateful for the opportunity to clarify that point. In full, the amendment would provide for any

''owners of superior property interests who are to be liable for BID levy for a chargeable period''.

In other words, the amendment's conditions follow only if the BID arrangements are to include owners of superior property interests, but they may not be triggered if a local BID decides not to include such owners.

The third argument—for the benefit of the hon. Member for Cotswold, I am quoting directly from the document—is:

''Any proposal to introduce a new tax would almost certain be opposed by almost all sides of the Houses of Parliament. MPs would argue that it increases the burden on business when the economy is looking weak.''

It is for the Committee to take that decision about whether Parliament will follow the proposal of extending BIDs to property owners. It is not for civil servants or the Ministers to decide that without coming to this place. I found it interesting on Second Reading to see the support coming from Government Back Benchers, Conservative Members and Liberal Democrat spokesmen.

Andrew Turner (Conservative, Isle of Wight)

I am curious about why the hon. Gentleman is so critical of the content of the document. It is entirely responsible for the Minister to marshal such arguments as may be appropriate to amendments that may be contemplated or tabled and then to judge whether to deploy those arguments. With respect to you, Mr. Griffiths, the hon. Gentleman seems to be wasting the Committee's time, not technically, but by prolonging the debate unnecessarily by running through a range of arguments that the Minister may never deploy.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

If I was wasting the Committee's time, you would no doubt bring me to order, Mr. Griffiths.

Win Griffiths (Labour, Bridgend)

If the hon. Gentleman was out of order, I would.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

The hon. Member for Isle of Wight (Mr. Turner) should know that, and having sat through this morning's sitting and listened to their points, which verged on a deliberate filibuster, I must say that it is a bit rich for Conservative Members to criticise my arguments. I disagree with the hon. Gentleman. He is right to say that the Minister may deploy whatever argument he wants, but the Government presented the arguments that I have mentioned to the British Property Federation, and my amendments address that point. I may be anticipating the Minister's reply, but that is helpful and arguably saves the Committee time.

I have far more sympathy with the fourth argument, which is:

''There is a general belief that any levy imposed on property owners will simply be passed on to the tenants, through increased rents. This would need to be separately researched.''

I have some sympathy with that idea, but the level of rents in an area will be influenced far more by other conditions that have a greater impact—in particular whether the business improvement district is having an effect. New clause 4 was tabled to counter that argument. Like my other amendments, it was drafted with the help of the British Property Federation. The British Retail Consortium especially favours the proposal to deal with the Government's argument. New clause 4 would alleviate the danger that property owners would simply pass on the extra levy.

The fifth argument against the proposal is that although the matter has been debated in Select Committees, with academics and with interested parties, no one has come up with a viable mechanism to make it work. My amendments and those tabled by the hon. Member for Cotswold provide the viable mechanism that the Minister is looking for. He may try to argue that the amendments are technically flawed. [Interruption.] The Minister says that he will not do that, and that is welcome.

Chris Leslie (Labour, Shipley)

Well, I may.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

The amendments have been carefully drafted with input from leading legal professionals who were guided by a group of 11 organisations representing tenants, landlords, local authorities and

practitioners from those bodies that are experimenting with pilot business improvement districts. They are exceedingly well crafted, and better than some that I drafted myself. There is a viable mechanism to include property owners.

The sixth argument is a practical one: the limitation of a measure taxing property owners would have to be clearly defined. It follows from the first point that one would not want legislation that could drift. Property owners would rightly be worried if the Bill could be interpreted more widely than intended. The amendments were not drafted in a haphazard way, but tightly drawn so that the imposition of the levy would be carefully focused, and the local people, property owners and tenants, would decide their own rules for a BID.

At first, I was worried about another practical problem: the identification of property owners, as there is some evidence that it can be difficult to determine who has interests in different properties. I asked searching questions of people who are promoting the idea about whether it was really practical and whether it would be possible to identify all the property owners in towns throughout the country. The answer from the experts was that, by and large, the relatively inexpensive existing procedures of the Land Registry and other bodies can be used to identify most property owners. The people promoting the ideas admit that in some circumstances it will be difficult to find every owner of a property in the business improvement district. I readily concede that that is not an issue today, but the wording of the legislation allows the promoters of the business improvement district to take a practical approach. The owner of a property who had the freehold on a 999-year lease, but a negligible economic interest in it that was not worth taking into account, unless they had somehow found a way of achieving immortality, could not be considered for the BID and would not be liable for the levy. The amendments, if accepted, would get around that problem.

Identification would, in effect, be led by local BID proponents who could weigh up the costs and benefits of trying to identify every property owner in their BID area. It would seem odd if the inability to identify just one or a handful of property owners would prevent a local partnership from involving the vast majority of local property owners who wanted to contribute to the BID. That would not be practical or sensible politics, and I hope that the Minister would not argue that with any force.

We tabled new clause 5 to help BIDs to identify property owners where that is difficult. The questions and answers in the document go into significant detail. The next argument, which is understandable to anyone familiar with property law, is that there can be various levels of property ownership, including freeholders, long-term leaseholders and short-term leaseholders. Concern was expressed that the mechanism to involve all those different property interests would have to be very flexible. That is why we tabled amendment No.

93, which would enable the local BID proponents to identify which classes of property owners should be involved in the BID. It could therefore exclude the freeholders if the local BID proponents wished it. They would be free to make that choice according to the circumstances of the town centre or the area that was being considered. Again, the amendment would make the legislation more flexible.

Concern has also been expressed that it would be impossible to track down overseas or absentee landlords. Again, that hardly ever happens, as most of the high streets of Britain are owned by large property companies that are easy to identify. In many areas, there are relatively few property owners. The idea that hundreds of property owners have to be traced all around the world to get a BID off the ground does not bear scrutiny. Moreover, my arguments about allowing local BID proponents the flexibility to take a practical approach dismisses that belief.

There are questions about voting rights and how the system would work when the levy is split between different property interests. As amendment No. 98 makes it clear, we do not want to give property owners more votes, but stress that for the unweighted vote, each contributor would be entitled to only one vote per property, whereas the weighted vote, based on the rateable value, would be determined by the contribution that each interest is making to that BID. Again, that would be determined locally. Flexibility is built into the amendments.

The 11th argument—I am trying to canter through as quickly as possible, but I see that someone wants to intervene.

Patrick Hall (Labour, Bedford)

Will the hon. Gentleman clarify a point about the weighted vote, which I may have misheard? Is he saying that property owners should exercise the weighted vote? Presumably that would apply only after the first vote is determined—in other words, when those with a single vote per property register a yes vote. If there is a majority the first time, the second vote will come into play. Is that when he believes that property owners should have a say?

Edward Davey (Liberal Democrat, Kingston and Surbiton)

It would depend on the terms of the local BID. That is the point of allowing as much flexibility as possible. We drafted amendment No. 98 to confute the accusation that someone possessing many properties could register a huge amount of votes.

I was about to deal with the concern that local authorities would have to develop new systems to handle the so-called new tax—a practical concern that has been overplayed. Local authorities are good at developing new systems: they have to be, because different Governments give them different taxes, charges and responsibilities over the years, and the ingenuity of authorities in responding to those changes has been considerable. The proposals provide for them to recoup any expenses incurred in administering the bid. I doubt whether developing the new system would prove too onerous for local authorities.

Lawrie Quinn (Labour, Scarborough and Whitby)

On that very point, the hon. Gentleman is talking about a potential merry-go-round of finance. He knows that a local authority can

sometimes be the owner of property, so following his argument through, it would be liable for costs. He spoke about recouping extra administrative costs, but is his argument not circular? He is going through a long and tortuous analysis of 16 so-called points relating to a document that we have not even seen. As the hon. Member for Isle of Wight said, is he not really wasting the Committee's time?

Edward Davey (Liberal Democrat, Kingston and Surbiton)

Far from it. We are dealing with the practical issues that would have to be taken into account if property owners were to be involved in a business improvement district. A system would be necessary. The hon. Gentleman talks about a merry-go-round of money, but the same applies to most business improvement schemes—for example the one being piloted in my constituency. The local authority will be a member, but only a small member, of the local business improvement district. I can imagine circumstances in which the local authority was by far the largest member, but if it were the major property owner and had allowed its own district to fall into disrepair in the first place, it would have some questions to answer for its local electors. In the main, we are talking about areas where we want the private sector to become involved. Under our proposals, property owners, as well as retailers and other tenants, are relevant, so the whole private sector can work in partnership with the local authority to tackle the problems of our town centres.

Lawrie Quinn (Labour, Scarborough and Whitby)

That confirms my point. This is getting into a perverse merry-go-round of finance. The local authority can, as in the centre of Scarborough, be the owner of the property, so it can be charged and levied on that account. The hon. Gentleman argues that the authority could then recoup the costs. It is a perversion of that merry-go-round of trying to track a financial stream. He has aspirations to be on the Treasury Bench. He must tackle this and stop wasting the Committee's time.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

The hon. Gentleman does not really have a point. The idea that there will be a huge paper trail is nonsense. It does not come well from a Labour Member whose Government have pushed through the Community Care (Delayed Discharges etc.) Bill under which social services will charge the health service and pay the money back. We have had a real merry-go-round that will create an administrative paper trail. I do not accept the hon. Gentleman's point and it ill becomes him to make it, given that he voted for a Bill that will cause problems for local authorities up and down the country.

David Borrow (Labour, South Ribble)

I am a bit concerned about the practical issues surrounding the collection of these charges. Have the hon. Gentleman and his colleagues consulted the Local Government Association and, more importantly, the Institute of Revenues Rating and Valuation for advice on the practicability of seeking to levy owners rather than ratepayers, which is what is envisaged in the Bill?

Edward Davey (Liberal Democrat, Kingston and Surbiton)

The LGA—I cannot speak for the IRRV—has expressly supported the inclusion of property owners within the legislative framework for BIDs. The association that represents local government, the body on which we will impose all those extra burdens, according to Labour Members, has said that this is a way forward. That tends to negate their argument.

The 12th argument is:

''A register of owners would need to be developed and maintained by some agency.''

As I have insisted throughout, all those arguments can be dealt with by local discretion. That is the whole point. If the local area wanted to set up its own register it could do so. Those proposing the BIDs at local level would know whether it was cost-effective to put every landlord on the register. It should be left to them to decide whether the costs outweighed the benefit as, to be fair, the Government are doing in many other aspects of the legislation.

There are four other arguments that I want to look at briefly together.

Geoffrey Clifton-Brown (Conservative, Cotswold)

On a point of order, Mr. Griffiths. Before we get on to the four other arguments, we still do not know what the document is. The hon. Gentleman is making a long speech based entirely on one document. We still do not what status it has. If we are to have a useful debate we need to know what it is.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

We have dealt with that point and I am rather surprised that the hon. Gentleman has already forgotten when the Minister and I debated the matter. He is obviously suffering from memory loss after too good a lunch.

The four remaining arguments relate to parliamentary scrutiny. The document, which has been drafted by civil servants and was made available via the British Property Federation, states:

''These practical issues could be overcome by detailed redrafting of the legislation.''

The implication is that that would take a lot of time and would delay the passage of the Bill. The amendments show that that is not the case. The other argument is that the legislation needed to be in draft form, as the rest of the Bill was in draft form, and would require lengthy consultation with all the various bodies. The Minister and his colleagues have undertaken lengthy consultation already on the overall framework of BIDs. The consultation has been thorough and has been welcomed. The amendments have been developed through that consultation process. Further consultation is therefore unnecessary. The Government have done that for us, and the amendments have emerged from that consultation.

It is also argued that the best way forward on the issue of whether we should include property owners would be to give regulation-making powers to the Secretary of State. We could introduce a simple clause that would give the power to make regulations in due course. I hasten to add that I did not come up with that argument; officials did. That would be a bad way of dealing with the matter, and I would not support

giving the Secretary of State the power to make regulations—nor, I am sure, would other hon. Members. We should not use secondary legislation to include property owners, and that is why the amendments have been tabled. They would include property owners in the Bill, in primary legislation. However, it appears that the Government think that that could be done through regulations.

The final argument is particularly interesting. [Interruption.] The hon. Member for South Derbyshire (Mr. Todd) is obviously waking up now. There is an argument that, if one were to include the provision at this late stage, it might prompt enough opposition to jeopardise the Bill. That argument is mentioned in the document that the Minister and his officials have been debating with the British Property Federation. The point is that everyone who supports BIDs, inside and outside the House, would like property owners to be included.

The idea that the amendments could stir up such opposition that the Bill might fall in another place is clearly nonsense. The truth is that if the Bill is to be enacted, we must ensure that we set up business improvement districts that will be successful. We must get the Bill right if we want BIDs to meet the objectives that the Government have rightly set out for them, which are welcomed on all sides. By excluding property owners, we put the future and success of business improvement districts at risk, and that is the big hole that has emerged from the work that has been done up to now. I am saying not that some business improvement districts would not work without the inclusion of property owners, but that if we include them from the start, the chances of success are that much greater. The idea that there will be opposition to amendments proposed by the sector that will be hit, and viewed by those outside the House as being helpful for the success of business improvement districts, is nonsense.

The reason why I have talked at such length—and I am sorry if hon. Members feel that I have wasted the Committee's time—is that I wanted to go through the internal Government arguments against including property owners. I believe that they do not stand up to analysis. The amendments must be seen together, and it is right that they have been grouped together. They answer all the Government's concerns. After being briefed for the debate and considering the policy issue in detail, I was left wondering why the Government did not intend to include property owners. There is no argument against it. The Government have offered only nit-picking arguments that can be dismissed very quickly.

I look forward to the speeches of other hon. Members, and I hope that they will persuade the Minister to think again. I hope that he will assure the Committee that we will come back to the issue on Report—either with amendments similar to ours, or with some of his own—to ensure that there are property owners in business improvement districts, and that we make those districts a success.

Patrick Hall (Labour, Bedford)

The debate about the role of property owners in BIDs is important, because it is about making town centre management schemes work.

Some Committee members, including some from my party, have been a little bit unfair to the hon. Member for Kingston and Surbiton (Mr. Davey). I do not believe that the matters that he mentioned have wasted the Committee's time. Outside this place there is much interest in BIDs and related technical issues, including whether property owners should be compelled to get involved and contribute to BIDs if there is a yes vote. There are concerns about that issue and there is also information and interest about it outside this place and it is right that some of those issues are raised in Committee and that the Minister has the opportunity to put the Government's thinking on record. That is what Parliament is about. Having debated those issues, we—that includes Conservative Members—will not need to go over them again.

The Association of Town Centre Management is in touch with town centre management partnerships throughout the country and it knows what the feeling is on the ground. The Association led the excellent town centre management BIDs pilot projects, which are about to roll out—I try to avoid using that phrase, but I have not been able to on this occasion. Those are good projects, and Bedford and several other places are involved. The Association is uniquely placed—

Desmond Swayne (Conservative, New Forest West)

Will the hon. Gentleman tell those of us who do not have the benefit of the knowledge of the success of the pilot projects what the key difference will be between the pilots and the arrangements to be made under the Bill? There will clearly be an element of compulsion consequent on the arrangements in the Bill, which would clearly be absent in any pilot.

Patrick Hall (Labour, Bedford)

The pilots are not running yet—they are just beginning. Their purpose is to ensure that when—as we hope—the legislation is enacted, places throughout the country are ready to hit the ground running in order to make the schemes work. The pilots have been drawn up in anticipation of legislation that does not yet exist.

Geoffrey Clifton-Brown (Conservative, Cotswold)

The hon. Gentleman is interested in town centre management schemes, and he will know that those have existed for about 10 years. There have been a number of successful schemes, notably in Bristol and in other towns. Will he tell the Committee what town centre management schemes cannot achieve that BIDs will?

Patrick Hall (Labour, Bedford)

That is a slightly different point. Various town centre management schemes have existed for more than 10 years, but that is not the same as preparing for BIDs. The hon. Gentleman will know that benefits have be gained from the experience of existing town centre schemes, and lessons that have been learned from that have led to growing pressure for the Government to bring about the opportunities that BIDs will develop. Most of those schemes were, until now, operated voluntarily. One issue that has been raised in the light of experience is that the people

who contribute benefit everyone in the town centre, including those who do not wish to contribute. The voluntary principle is relevant to business rate payers and to property owners. I hope that my hon. Friend the Minister will deal with that matter in his response to the debate.

In the experience of the Association of Town Centre Management, there is overwhelming support for involving property owners in a more coherent manner than is the case with current town centre management projects. It also takes the view that the involvement of property owners is more likely to get enthusiastic support from the business rate payers. In other words, that would be a yes vote to a proposal to establish BIDs. It has already been said that most existing schemes already involve property owners, but that is on a voluntary basis. There are repeated complaints about the issue of freeloading; some property owners get involved and others do not.

My right hon. and hon. Friends on the Front Bench have taken that issue on board to justify the introduction of BIDs for business rate payers, most of whom are tenants. If freeloading is not acceptable for tenants in such schemes, in principle it should not be acceptable for property holders. Naturally, we should like to involve everyone on a voluntary basis, but the success of the scheme can be undermined if too many people will not participate, even though they are happy to benefit quietly from the result of the contributions of others.

The Bedford Town Centre company is also keen that property owners become involved in the BID. A recent survey of town centre businesses in Bedford revealed that 28 per cent. of business units are owner-occupied and that those people are identified and known. The rest are tenants. The company deals with nitty-gritty, day-to-day issues and its view is that the definition of owner should be

''the owner of a superior property interest''.

Such a definition could be complex, as the hon. Member for Kingston and Surbiton said, but the view in Bedford is that the organisation should be that to which the tenant pays rent, the body nearest to the tenant. Trying to keep matters as simple as possible is absolutely essential in such schemes. The more complicated we make them, the more barriers we put up against them. We then lose out from the potential benefits to which so many people are signed up.

I have legitimate questions about whether property owners, however defined, should be compelled to participate if a scheme goes ahead. Will it be practical and cost-effective to identify the property owners? Will it be necessary to identify several layers of superior property interest? Who will do it? I suppose that the answer is the local council's estates and legal department, drawing on the well-established experience of local authorities when preparing compulsory purchase orders.

I understand that the identification of owners at that stage in the compulsory purchase process can take about three months for a particular scheme. It could take longer for a town centre because that is bigger, but

the well-established principle is that it can be done. It is already acknowledged under existing legislation regarding compulsory purchase, however, that it may not be possible, and frequently will not be possible, to identify each owner in a potential compulsory scheme. As has been said, owners may be abroad, but that does not, of itself, stop compulsory purchase orders going ahead. It is not necessary to deal with 100 per cent. of matters to proceed with compulsory purchase orders. That principle could be applied to BIDs, too.

John Pugh (Liberal Democrat, Southport)

The hon. Gentleman has more experience of such matters than I have, but if the property owners are not involved and if the BID's development and regeneration continues, they have a residual capacity to harm a scheme by using infrastructure developments as an excuse simply to put up the rental values. In some cases, although they may not contribute much by being involved, they can have a negative impact on the schemes.

Patrick Hall (Labour, Bedford)

Indeed. I do not think that members of the Committee or people elsewhere are arguing that property owners should not be involved. The argument is about how to harness the matter. Should there be compulsion if a scheme goes ahead? Of course, property owners should be involved. If they are not, the potential of the scheme will be diminished. I am talking about not only income but the enthusiasm and the long-term commitment that we need for town centres to flourish. The point is, should they be compelled to be involved in the way that business rate payers can be compelled if we go through the procedures to bring about a BID scheme through the voting and so on, which we will come to later?

A judgment has to be made as to whether it is worth the cost and time of finding all the owners in return for the yield from the BIDs' levy. The yield will depend on the nature of BID schemes all over the country because it is down to local decisions. It is not going to be handed down from Government. It is likely to be small; say, 1 per cent. of business ratepayers' yield from within a defined area, which will not be a huge sum.

I would prefer that judgment to be left at local level rather than the Government excluding the possibility of tightening BIDs by compelling owners to be involved if a scheme goes ahead. My hon. Friend the Under-Secretary may say that such freedom already exists; that local councils can go ahead and identify owners by the means councils have already employed for compulsory purchase projects. But if all the BIDs can do is to ask for voluntary contributions having identified the owners this may make it even less cost-effective to identify those owners in the first place.

I ask my hon. Friend the Under-Secretary to consider these matters carefully and to explain the Government's position this afternoon. There is a strong prima facie case for the statutory involvement of property owners in schemes that go ahead. Compelling arguments are needed today as to why this involvement could only be voluntary and why there are overriding reasons to prevent it from going ahead

as argued by the hon. Member for Kingston and Surbiton and others. If that is the Government's view, I look forward to hearing it.

Desmond Swayne (Conservative, New Forest West)

I shall not be as churlish as my hon. Friends about the contribution of the hon. Member for Kingston and Surbiton. I thought the document he brought to the Committee was very interesting. At the time it sounded sensible, although I confess I do not remember much of it now.

Geoffrey Clifton-Brown (Conservative, Cotswold)

Will my hon. Friend remind me of argument No. 14?

Desmond Swayne (Conservative, New Forest West)

I may have had a momentary lapse of attention by then. I am deeply sceptical about BIDs. I do not want to be tempted into a general debate on the principle because I am sure that it would not be afforded by these amendments, even though there are a large number of them. I will endeavour to confine my remarks to the subject matter that has been dealt with.

The hon. Member for Kingston and Surbiton's remarks at the beginning are fresh in my mind, whereas those at the end have completely escaped me. He described this concept as a voluntary tax. That remark goes to the heart of the misunderstanding of these proposals. This is not voluntary at all. A voluntary tax would be a charitable donation. Once the arrangements for a BID are in place and the required majorities have been secured there will be nothing voluntary about the arrangement.

One might as well say that, because increased taxation had been debated during the election campaign, taxation following a general election was voluntary taxation because the people had decided that they were going to pay it and voted for it afterwards. That would count as voluntary taxation, if we allow the hon. Gentleman his definition of this as a voluntary tax.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

Is there not rather a large difference between all the taxes that go into the one pot in the Exchequer and how they are held to account, and a specific local tax earmarked for a particular proposal, which is set before a small number of people to decide on? If the hon. Gentleman believes that there is no difference between those two propositions, I am afraid that we must continue to disagree.

Desmond Swayne (Conservative, New Forest West)

There is a difference, but the difference is not as the hon. Gentleman describes it. The difference is not in the principle that the money must be paid if someone is part of the scheme. The principle relates to how the money is spent. However, that would lead us into all sorts of arguments about additionality, which we would not want to pursue now.

Patrick Hall (Labour, Bedford)

I am intrigued by that possible means of reviving the Conservative party's electoral prospects. Is it likely that, at the next general election, the Conservatives will promise that if they are re-elected, income tax will become a voluntary tax?

Desmond Swayne (Conservative, New Forest West)

That would be a tempting prospect, and would take us back to Sir Robert Peel. However, I will not go down that road. The hon. Gentleman himself remarked that he was exercised by the problem of freeloading. If the benefits of the schemes were sufficient and self-evident, freeloading would be at a minimum, and at a level that would be tolerable because of the benefits that were generated.

I wish, however, to address the issue of property. I entirely understand that there is an argument from equity to suggest that, because the benefit applies to the property owner, so should some of the cost. However, I am concerned about the practicality of being able to achieve that end, despite the well-tailored amendments that have been tabled.

My hon. Friend the Member for Poole (Mr. Syms) was seeking to catch your eye, Mr. Griffiths, but unfortunately he has had to leave to participate in the Adjournment debate that he has secured in Westminster Hall. He made an interesting point at the outset, when the hon. Member for Kingston and Surbiton was enunciating the benefits of BIDs and the increased prices that would attend property in those areas. My hon. Friend the Member for Poole intervened from a sedentary position, pointing out that prices might equally fall. That is certainly a possibility.

We are discussing areas in which taxation, voluntary or otherwise, will be higher than it would be elsewhere. Clause 43(2)(a) states:

''the projects specified in the arrangements to be carried out for the benefit of the business improvement district or those who live, work or carry on any activity in the district.''

It cannot be assumed that there will be a benefit. It is possible that the opposite might happen—that rents and property prices might be depressed as a consequence of the activity. Even if that were not the case, the important principle is that if a property owner benefits through an appreciation in his property values as a consequence of a successful BID project, he should not be expected to pay any consequent tax, levy or charge—however we might describe it—until a transaction has taken place that enables him to cash in on the escalation of the value of the asset. It would be most inequitable to expect him to pay a fee for the benefits of the BID if he had not been able to cash in through a transaction.

If the BID raised property values, I would not expect a property owner to be expected to cough up until he had disposed of the property or secured a higher rental income as a consequence of new leasing arrangements. I would want that principle included in the arrangements for securing a contribution from property owners to the BID.

Notice that subsection (2)(a) says that the purpose of the arrangements is to enable

''the projects specified in the arrangements to be carried out for the benefit of the business improvement district or those who live, work or carry on any activity in the district''.

It is important that the provision applies to those who live in the district as well, but I have my greatest reservations about that. I know that there is no

suggestion of the possibility of something for nothing, which will be a great relief to those who live in the BID areas. Now that the real question of voluntary taxation arises, perhaps they might be moved to make a voluntary contribution toward the great benefits to be heaped upon them.

The real issue is that although the areas might be for the benefit of people who live there, those people will have no means of shaping and determining them. The issue of accountability arises from that. The arrangements will be for their benefit—they are not expected to cough up for them—and will shape the environment in which they live, but they will not be able to determine them. I have great reservations about that.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

I am trying to follow the hon. Gentleman's argument. Is he saying that he favours property owners being compulsorily involved in the BID?

Desmond Swayne (Conservative, New Forest West)

No. I understand the argument for including property owners, but I stated an important principle that a property owner should not be expected to contribute until he has received financial remuneration to take account of the notional benefit that he has allegedly gained. He should not have to pay until he has money to pay with.

I was moving on to whether people who live in the BID area should make a contribution. That would be an interesting debate, but I doubt that it will be held. However, the matter gives rise to a bigger question on accountability and an even bigger question on additionality, but now is not the time for that debate.

Geoffrey Clifton-Brown (Conservative, Cotswold)

We have had a long debate on the subject, which is not surprising because it is important. I was perhaps a little mean to the hon. Member for Kingston and Surbiton: although I had not seen his 16-point document, he raised several interesting points, as did the hon. Member for Bedford and my hon. Friend the Member for New Forest, West.

I approach the matter in a spirit of sceptical realism. The concept is American and it follows on from the American concept of town centre management. Some of the first town centre management schemes were implemented in New York and they were successful. Several of our more enlightened larger institutional property owners such as Marks and Spencer and Boots then used the scheme in this country, and 10 years ago we had successful schemes in Bristol, Nottingham and elsewhere.

I pose the key question to the hon. Member for Bedford: what can town centre management schemes not produce that BIDs will be able to produce? I am not sure that he answered successfully. The BID scheme has been copied from America, but the American system is totally different in respect of rates. It is based on property owners and property owners paying, whereas our scheme is based on rateable values, and by and large the tenants or lessees pay those rates. We are expecting to plonk this BID scheme in two totally different systems, which is why I approach the whole thing with sceptical realism.

That said, other hon. Members have made the point that many outside bodies, including the British Property Federation, the Royal Institution of Chartered Surveyors and the Confederation of British Industry, have recognised the importance of involving property owners in BID schemes. Most prefer BID schemes to the supplementary business rates, because a supplementary business rate scheme would simply be imposed by the local authority. There would be no possibility of any ballot, and therefore no possibility of anyone having a say as to whether they wanted the scheme.

We are considering whether property owners should have an interest in BID schemes. I think that it was John Bright's maxim that there should be no taxation without representation. If property owners are involved in paying for part of the scheme, they must be involved in the balloting procedure. We will need to examine that when we deal with later clauses. Incidentally, John Bright also said that taxation should be simple and easy to collect—a maxim that all Ministers might heed with advantage.

Our amendments Nos. 72, 73, 151, 75, 98 and new clauses 4 and 5 cover some of those matters. I say to the hon. Member for Kingston and Surbiton, in the nicest possible way, that if he is going to copy my amendments, he should copy them in full, rather than plagiarising part of them and thinking that he has done the job.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

For the record, I thought that my amendments were tabled before the hon. Gentleman's. They were certainly tabled on the same day, because they did not appear on different amendment papers. Moreover, I tabled the amendments in the way that I did because I received them from outside bodies and decided to table them accordingly. He did not.

Geoffrey Clifton-Brown (Conservative, Cotswold)

If the hon. Gentleman looks at the numbering of the substantive amendments relating to property owners, he will see that mine is No. 73, and his is No. 96. That implies that he tabled his considerably later than I did mine—if he is listening. Nevertheless, if he tabled an amendment that I agreed with, I would be perfectly happy, in the spirit of bipartisanship, to put my name to it, and I would expect him to do the same.

The amendments address a number of questions. Should property owners be involved? How would they be identified? What proportion of the supplementary rate would they be expected to pay? If the Government consider the matter, they will need to consider all those problems.

First, how are property owners to be identified? This country has no system of registers for owners of commercial property. However, as with certain planning enforcement notices, it would not be beyond the wit of man, as the hon. Member for Bedford said, to give local authorities the power to require the tenant to give full details of the property owner. Interestingly, the hon. Gentleman suggested that the person next in line should pay, but the problem is that that person may not have the major property interest. Anyone who knows anything about major property ownership

knows that there can be many layers—a head and sub-lessee, a sub-tenant and a licensee. Who should be liable to pay the BIDs levy and at what rate? We begin to get into some significant arguments about definition.

It would be possible to draw up a list of property owners, but there are significant difficulties. As Committee members have asked, what happens when the property owner is deceased and the property is subject to executors of a will? What happens when foreign trustees own the property? There are significant difficulties, which must not be underestimated. However, it is not beyond the wit of man to do that if that is what is required, and the hon. Member for Bedford should understand that if we go down that road, all property owners must be identified. It is no good identifying only some. If we want a system in which property owners pay, they all must pay. Otherwise, it would become arbitrary and unfair.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

I hope that the hon. Gentleman is not speaking against his amendments, as he appears to be. Amendment No. 72, which is similar to but not quite as good as amendment No. 93, uses the phrase

''or a class of property owners''

and starts with the line

''where so specified in the BID arrangements''.

That drafting was specifically included to ensure that the local BID would have the flexibility to deal with the problems that he and the hon. Member for Bedford mentioned. All those points have been dealt with in the amendments, and the hon. Gentleman should perhaps have read his own.

Geoffrey Clifton-Brown (Conservative, Cotswold)

The hon. Gentleman is making a rather snide point, and he has not considered even half the difficulties. He read out a long 16-point argument, but if he knew anything about the subject, he would consider the practical difficulties before acceding that the property owners should be involved. I am adducing some of the practical difficulties. I will then say whether property owners should be involved. It is typical of the Liberals to criticise without understanding the detail.

The hon. Member for Bedford made an interesting comment that if 1 per cent. of the defined yield were to come from property owners, it might not be realistic to go to all the trouble of finding out who all the property owners are. I suggest that the yield would be considerably greater than 1 per cent., so it is worth at least considering whether property owners should be involved.

Amendment No. 73 would insert new subsections (1C) and (1D), which the Liberals chose to omit, on whether the residual proportion could be paid or recovered by the landlord. Again, that is an interesting problem. As my hon. Friend the Member for New Forest, West rightly pointed out, a property owner often sits on a property as an investment. A property owner may be a pension scheme, using the investment to pay out thousands of pensions, and it would not get

any benefit from a BID scheme until the property was sold and the gain crystallised. On the other hand, waiting until the gain crystallised could take 20 years, and BIDs may not run for more than five. They have a five-year initial term and may not be renewed.

The Opposition broadly support my amendment, but recognise that there are significant difficulties in bringing property owners into the system. Indeed, we think that there are significant difficulties with the system as a whole.

Chris Leslie (Labour, Shipley)

Did I hear the hon. Gentleman correctly? Did he say that the Opposition broadly support their own amendments? Will he clarify whether he believes that owners should be involved or not?

Geoffrey Clifton-Brown (Conservative, Cotswold)

I made that clear, and the Minister is being mischievous. Amendments are often moved in a probing fashion to elicit a Minister's views. We do not always have to support probing amendments 100 per cent. In this case, we broadly support the amendments, we broadly support the BIDs scheme, we recognise some significant difficulties with it and see even greater difficulties with bringing property owners into the system. As a practical way to introduce the scheme, we could bring the system in the Bill into effect, but make provision for property owners later.

Finally, what schemes are envisaged under the BIDs system? If we are not careful, we shall simply replicate what the local authority should do in any case. What is the scale and degree of the schemes covered by BIDs? We can envisage relatively small schemes costing tens of thousands of pounds—perhaps the odd million or two in some instances—but not large infrastructure projects. Perhaps one is envisaged. Will the Minister tell us? I find it easier to envisage tasks such as street cleaning, tidying up an area's appearance, clearing open spaces, planting trees, improving the environment and other such relatively small-scale projects. Will he tell me whether I am wrong?

We have had a long debate and it is worth moving on to hear what the Minister has to say. Many detailed questions surround the BIDs, not least who pays the incorporation costs, how the ballots will work and what the revocation powers of local authorities will be. We shall debate them all in due course, but here and now, on the principle of the BIDs, it will be interesting to hear what the Minister has to say.

Chris Leslie (Labour, Shipley)

We have been building up to this moment and it gives me great pleasure to support the next part of the Bill, which deals with the new opportunities created by the Government for business improvement districts to provide additional services and improvements to the benefit of local communities.

On this large group of amendments, we have debated the involvement of property owners in BIDs—an issue to which we gave a great deal of thought in drafting the Bill. We recognise that the support of property owners is vital to the success of BIDs throughout the country, but the Bill already provides them with ample opportunity to become

involved at every stage of the process. Clause 45 enables property owners to make voluntary financial contributions to BIDs. We know that many would like to contribute in the same way as non-domestic ratepayers. However, as we said in the White Paper that proposed the idea of creating BIDs, significant practical difficulties surround extending a levy to property owners outside the rating system, which brings us to the nub of the question. It would effectively require a new tax on property ownership.

Legislating for a new tax on property ownership would make a significant change to our current methods of taxation, which would be difficult to justify for the sake of BIDs alone.

Mr. Davey rose—

Chris Leslie (Labour, Shipley)

Before I give way to the hon. Member for Kingston and Surbiton, may I say that he made interesting use of the document supplied to him by the British Property Federation? He cited it, anticipating arguments and trying to rebut them in advance—a pre-buttal process. That was defensive argument in support of his amendment, which rather eroded some of his points. He argued that the new tax on property owners would not be a tax at all, but a collective investment. He needs to reconsider his argument. An entirely new tax on property owners would be extremely costly to set up and difficult to administer, and would be a radical change to our taxation system. I know that the hon. Gentleman, as a putative Liberal Democrat Treasury spokesman, is keen on the idea, but has he had the chance to cost the assessment process, or the collection and enforcement of such a tax?

Edward Davey (Liberal Democrat, Kingston and Surbiton)

I would have thought that the Minister had done that before rejecting the idea, given how many people would like to pay the tax. He says that it is impossible to take my approach without introducing a new tax. Why? We already have the tax base. The amendments would ensure that the rates of property value were shared proportionately between the tenant and various parties with property interests. Why is the idea so impossible, and why would it require new legislation? I do not understand his argument.

Chris Leslie (Labour, Shipley)

We simply do not have the tax base for property owners. Lists of owners who would have such levies placed on them are not readily available, unless the hon. Gentleman knows something that the rest of the country does not.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

The Minister is right to say that we do not have a list in every town centre that can be taken off the shelf, but the amendments would leave it to the local BID proponent to work out the costs and benefits of assembling such a list. Why is he against local BID proponents having that option?

Chris Leslie (Labour, Shipley)

Simply because it is not practical or feasible. To suggest that BID proponents should go through the arduous and unnecessary process of devising a new taxation system on property owners is to be in the realm of the hon. Gentleman's Liberal Democrat Valhalla.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

The Minister is wrong—it is to be in the realm of practical decision makers who want to make BIDs work in their communities. As he has not answered the point, I ask again why he is not prepared to give people the option of going down that road. They would not be forced, and local BID proponents could decide whether they wanted to.

Chris Leslie (Labour, Shipley)

I do not wish to keep repeating myself: that is not a practical option. It is like suggesting that BIDs should be able to devise any money-raising taxation system to finance themselves. The hon. Gentleman would presumably let BID proponents have complete freedom over revenue-generating activities, and would allow them taxes on goodness knows what in the area that they supply. As my hon. Friend the Member for Bedford suggested, if BIDs are to be successful, we must ensure that they have simple, clear and comprehensible rules, and a framework. BIDs need a certain simplicity if they are to fly.

Geoffrey Clifton-Brown (Conservative, Cotswold)

If the Minister is going to lift the American idea of BIDs and incorporate it in a British system, and if it is to work and have credibility, he must explain why the tenants, who may not benefit from the scheme but will pay and vote for it, should feel happy about that scheme when landlords, who will not vote for it, will probably benefit from it due to the increase in the value of their property. That is a real problem, and he has not explained how he will get over it.

Chris Leslie (Labour, Shipley)

I am not sure what problem the hon. Gentleman has with the idea of the many benefits that might result from a BID. If ratepayers consent to the creation of a BID, it may have benefits not only for them, but for others, including those who live in the area, and perhaps owners, too.

Mark Todd (Labour, South Derbyshire)

How likely does my hon. Friend think it that a business ratepayer, who was not a freeholder, would proceed to decide on how he would vote on a BID without consulting the freeholder, with whom he must have some intimate relationship and a clear understanding of either joint value, joint risk or joint harm?

Chris Leslie (Labour, Shipley)

In some cases, the ratepayer might speak to the freeholder, but if he were not an owner-occupier he might choose not to do that. There would certainly be ample opportunity for the owners—the freeholders—to get involved to make voluntary contributions, and if the scheme is to be beneficial I do not see the downside that the hon. Member for Cotswold suggested.

Geoffrey Clifton-Brown (Conservative, Cotswold)

The proof of the pudding will be in the eating. If the tenants vote for the scheme, they will obviously reckon that they will benefit from it. Few schemes will get off the ground unless there is some means to address the problem that the landlords, who do not have a vote, will benefit from the uplift for their property while the tenants, who have a vote, will not. There will be a real disincentive for tenants to vote for those schemes.

Chris Leslie (Labour, Shipley)

A moment ago, the hon. Gentleman was sceptical when speaking to the amendments standing in his name, which he broadly supported. He then said that, at some point in the future, we should think about having owners involved. He now seems to suggest that it is integral to the concept of a BID that an owner should be involved from the outset. I do not believe that that point is clear on his side. [Interruption.]

Win Griffiths (Labour, Bridgend)

Order.

Chris Leslie (Labour, Shipley)

If the hon. Gentleman is to table amendments, even if they are simply probing, at the very least he should marshal his arguments so that it is clear what point he is making.

Geoffrey Clifton-Brown (Conservative, Cotswold)

It is no good the Minister pointing out inconsistencies in my proposals. He is the Government spokesman, and the Government are introducing these proposals. So far, he has failed to explain how schemes will succeed when landlords, who will benefit from them, have no vote and tenants, who will not benefit, have a vote.

Chris Leslie (Labour, Shipley)

If the tenants felt that they would not benefit, they would not vote for the scheme in the first place. That is not exactly rocket science, but it is the operation of the proposal that may be involved in positing a BID scheme.

Patrick Hall (Labour, Bedford)

On the point about tenants benefiting, does my hon. Friend not agree that tenants within the existing voluntary arrangements and partnerships are already signed up to them because they see improvements in footfall and trade as well as a safer, more pleasant, viable town centre?

On the point about property owners or the people to whom the tenants pay rent, I would like the Government's proposal to be tightened up. Nevertheless, it is likely to lead to tenants putting pressure on owners, talking to them about what is going on and asking them to support those schemes, possibly voluntarily, but preferably not. Does my hon. Friend agree?

Chris Leslie (Labour, Shipley)

I agree that there are a series of possible cascading benefits to come from the creation of a BID. My hon. Friend should know: with his experience in town centre management, he is more qualified than most in this Room on the matter and his arguments are cogent. The amendments would not only provide for a new tax on property ownership, but allow the BID proposals to have discretion on whether that tax would apply to property owners or simply to business ratepayers. That would be not only unfair to ratepayers, who would be obliged to contribute to the BID levy should a majority vote in favour of the scheme, but extremely costly and difficult to administer. That is the point I made earlier.

New clause 5 would oblige a local authority participating in a BID to help to identify the ownership of land. That would mean that it could have to seek out the details of every owner of every piece of property, many of whom are likely to live outside the local authority area and some of whom might live abroad. That point was raised by the hon. Member for

Kingston and Surbiton. Those owners might be unaware of the proposed bid scheme, and all that would cost a great deal of time and money.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

Earlier in the proceedings, we said that Ministers were reading a lot of guff from their briefs. The Minister is falling into that trap again. He is making assertions about the costs and the practical difficulties, but he is giving no practical examples with figures showing any analysis that he and his Department have undertaken to justify their arguments. The industry has suggested practical, legislative alternatives that would not place requirements on every bid, but would be options for local bids. Therefore, the Minister has to do rather better by giving practical reasons why that is impossible.

Chris Leslie (Labour, Shipley)

The hon. Gentleman is proposing a new property-owners tax, so he should explain how that would be practical. The Government do not believe that it is practical. If he thinks that it is wrong for us to say that the creation of such a new tax with a whole new tax base and whole new assessment, collection and enforcement processes is feasible, easily affordable, cheap and no difficulty at all to achieve, I do not think that he will shortly fulfil his ambition to be a Treasury spokesman for the Liberal Democrats. He should re-examine the proposal that he has signed up to, and consider whether it is a prudent and sensible measure, given that the proposals for the BID system, based on the existing ratepayers and lists, is the best, most practical and reasonable way to progress.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

Can I confirm for the record that the tax exists—the business rates? We are not talking about introducing a new rate or a new tax or a new charge. We are talking about sharing the extra bit on that rate between the different interests—the tenant and the superior property interest. That can be done; the lawyers suggest that it can, and the amendment would do it. Why do the Government insist on refusing to answer that argument?

Chris Leslie (Labour, Shipley)

I suspect that the hon. Member for Isle of Wight is champing at the bit to get in to help demolish the argument of the hon. Member for Kingston and Surbiton, but I want to preserve that privilege for myself for a moment.

The hon. Gentleman is suggesting that because a tenant pays his or her rates it is easy to subdivide a proportion that the owners should pay. The problem of how he would identify who those owners are and how he would determine what the proportion to be paid should be remains a difficult bureaucratic task. As my hon. Friend the Member for South Derbyshire said, if the owner wishes to contribute in part or in whole towards the ratepayer's contribution to the BID, they are entitled to do so.

Andrew Turner (Conservative, Isle of Wight)

The hon. Member for Kingston and Surbiton does not seem to realise that if the owner is taxed, that will eventually filter through to the tenant. [interruption]. I am in danger of allowing the hon.

Gentleman to intervene on me in the middle of my intervention on the Minister. Any tax on the landowner will eventually filter through to the tenant. The landowner's only alternative is to leave the property untenanted.

Chris Leslie (Labour, Shipley)

The hon. Gentleman has found further flaws in the concept of requiring property owners to contribute. Perhaps he should also have a word with the hon. Member for Cotswold and take another look at amendment No. 151, which I may remind Conservative members of the Committee about in the future.

David Borrow (Labour, South Ribble)

Does my hon. Friend agree that the hon. Member for Kingston and Surbiton has not dealt with certain practical difficulties? If it is not to be a voluntary tax, there are issues surrounding its enforcement. All existing legislation assumes that enforcement is aimed at the occupier, rather than at the owner.

Chris Leslie (Labour, Shipley)

There are indeed considerable problems with the enforcement of a new property-owners tax. Many of the properties in Bingley town centre are allegedly owned by Argentine firms and all kinds of foreign ownership arrangements exist there—[Interruption.] Yes, apparently that is possible, even in Yorkshire. I do not know how the enforcement arrangements would apply in such circumstances. I suspect that that is a subject for another Liberal Democrat pamphlet dealing with the concept of a new property-owners tax.

Amendments Nos. 72 and 93 are also worrying. I am concerned about the definition of a superior interest in a property, which could include superior leaseholders as well as the freeholders, and would make the system even more confusing. The system that is suggested in amendment Nos. 73 and 96, which would divide the liability for the BID levy between the occupier and the owner of a property, is also a matter of concern. All the methods of collecting the BID levy and enforcing its payment would have to be adapted to allow for it to be collected from property owners. That would put another burden on the local authority, and it would not be necessary for a levy that was simply collected through the rating system.

New clause 4 would make a provision to prevent property owners from passing on their portion of the BID levy to other persons with an interest in the property, for example, existing tenants. However, that does not prevent owners from passing the burden to new tenants who may arrive during the duration of the BID. That loophole might allow property owners to transfer the burden of the levy to tenants gradually over time, while receiving the same benefits. That would undermine the position of ratepayers within the BID, and it might make it difficult to secure their confidence before the BID ballot.

We recently issued a working draft document that provides guidance on BIDs. That document, which has already been presented to the Committee, details a variety of different ways in which property owners could contribute to BIDs without implementing a

cumbersome new tax that would either make the system unduly expensive to administer or unfair to non-domestic ratepayers.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

Has the Under-Secretary had any advice from the Treasury about how proceeds from BIDs levies will be accounted for in the national accounts?

Chris Leslie (Labour, Shipley)

They will be accounted for in the normal manner, like any rate income. There are strong arguments to suggest that the levy would contribute to successful BIDs and we have had no objection from any Department in putting forward the Bill.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

Since the Under-Secretary does not seem to know the answer, will he undertake to consult his Treasury colleagues and see whether, under the Organisation for Economic Co-operation and Development rules for national accounts, revenue from BIDs levies will be accounted for as a tax.

Chris Leslie (Labour, Shipley)

I shall certainly consider that small point. I know that the hon. Gentleman is troubled with some issues surrounding definitions and I shall consider those.

Although the success of many voluntary town centre development schemes in the UK has depended on the contributions of landlords, those contributions have been made voluntarily. There is no reason to suppose that similar voluntary contributions would not be forthcoming in relation to a BID. Indeed, property owners would be more likely to invest if their contributions were matched by those of business tenants. Such a measure is more likely to garner contributions from owners if BIDs schemes are regarded as an exciting and beneficial prospect.

Under the clause, a BID can be established for the purposes of enabling projects to be carried out for the benefit of those who live, work, or carry on any activity within that area. Amendments Nos. 94 and 95 would expand ''projects'' to ''projects and services''. We have always seen the business improvement district as a means of delivering extra services in an area, which is what the businesses might want to do. In that respect, the amendments are not necessary.

Amendment No. 71 would ensure that a BID could fully benefit anybody investing in the area as well as those who work or carry on an activity there. However, to invest in an area is to carry on an activity there. The amendment adds little to the clause.

John Pugh (Liberal Democrat, Southport)

I want to follow up the point touched on by the hon. Member for New Forest, West about the position of domestic rate payers within the BID area. Their interests are well catered for under schemes such as the single regeneration budgets, and their numbers will increase as a result of the Government's drive for more homes above shops. They are represented in a BID area in that the local authority, which will usually be the billing agent, will have the right to veto plans if they conflict with local plans. In the regulations that the Minister will produce, will there be any imperative for the businesses concerned to consult not only with

those in the business circle who are not enthusiastic, but with domestic ratepayers who may be adversely affected by infrastructure developments?

The rest of the debate is in Hansard.