Local Government Bill

Public Bill Committee, 6 February 2003.

Standing Committee A

Clause 45 - Additional contributions and action

Geoffrey Clifton-Brown (Conservative, Cotswold)

Good morning, Mr. Griffiths. I must report to the Committee that I conflicted with the cleaners because I was unable to use the lift, which was stuck in the basement. However, the stairs are becoming easier, not because the steps are becoming fewer but because I am becoming a little fitter. If the Committee does nothing else, it might help my health.

The Committee will recall that we had started on part 4 of the Bill covering arrangements for business improvement districts and had had a long debate on whether property owners should contribute. We then moved on to clause 44 and how local communities will be consulted. At that stage the Under-Secretary must have been getting tired because he dismissively waved the matter aside, but I suggested that he and the Minister would probably have to return to the matter because if BIDs are to get off the ground and to be satisfactory, local communities will have to be on board.

Clause 45 covers additional contributions and actions and subsection (2) describes the people who may have to make contributions. One of the major groups is the billing authority and other superior and lower authorities—the county councils' own parish councils if part of their area falls within the BID. It also refers to other people who are

''authorised or required to do so in accordance with the arrangements.''

I want to quiz the Minister on that. What are those categories of other people? It was made fairly clear in previous debates that residents would not be required to pay, but if residents were involved in a scheme that was clearly to their benefit, one wonders in what circumstances they might choose to pay or be required to pay. It is worth trying to tease that out from the Minister.

Desmond Swayne (Conservative, New Forest West)

Subsection (2)(a) refers to

''the billing authority which has made the arrangements''.

Does that mean that the billing authority is merely required to hand over the finance that it has raised through the process of billing, or is it empowered to make additional contributions? As I understand it, the billing authority is likely to be as described in subsection (2)(b)—a county council or some other local government body. With that in mind, why are we expecting local authorities to make a contribution to

the BID, given that they are supposed to be self-financing as a consequence of the whole scheme? Why are we expecting local authorities to make a contribution that is additional to what would otherwise have been spent by local government?

I am concerned about the possibility of a democratic deficit arising because the bids are supposed to have been arrangements set up, in effect, by a local referendum, but under the clause local residents may be expected to stump up through the local authority. I hope that the Minister will assure me that only the money that has been raised through the BID billing scheme is expected to be paid under the clause and not additional resources from the local authority.

David Lepper (Labour/Co-operative, Brighton, Pavilion)

May I put on the record a matter of interest in that I chair the steering committee for the 22 pilot BID projects for the areas about which an announcement was made some two weeks ago? I do not want to contribute to the debate at this stage, but I thought that I should put that on the record as a matter of interest.

Chris Leslie (Labour, Shipley)

I am glad to say that we have managed to complete most of the speeches on clause 45 in a short time and I hope that that is a precedent for this morning's sitting.

Clause 45 allows voluntary financial and other contributions to the BIDs to be made. That will allow those who are not ratepayers subject to the BID levy to contribute to the success of the BID. As a result, local authorities, whether parish, district, county, borough or unitary, covering the area of the BID will be able to make contributions. The clause also allows any other person to make a voluntary financial contribution to a BID. That will allow, for example, property owners in a BID area to make financial contributions to it and those contributions may be written into the BID arrangements from inception.

The hon. Member for Cotswold (Mr. Clifton-Brown) asked who is required to pay. The only requirement on payment would be on ratepayers, as set out in the schemes. All others would be voluntary financial contributions, as clause 45 makes clear.

The hon. Member for New Forest, West (Mr. Swayne) asked whether, under subsection (2)(a), the billing authority will just hand over the levy or whether it has a power to make additional contributions. Subsection (1) is clear that persons specified may make financial contributions, which means that billing authorities—usually district councils—can have their own additional financial input into a BID scheme if they so choose.

I am glad that my hon. Friend the Member for Brighton, Pavilion (Mr. Lepper) drew attention to his crucial role in helping to guide the pilot BID projects to fruition. I know that he has taken a close interest in discussion of the clauses. I hope that his role will lead to a successful series of initial BID pilots that will in turn give other areas good cause to see that the scheme could benefit them.

Desmond Swayne (Conservative, New Forest West)

The Under-Secretary said that the clauses enable voluntary contributions to be made by other persons. Why does subsection (2)(c) refer to

''any other person authorised or required to do so''?

What is the significance of

''or required to do so''?

Chris Leslie (Labour, Shipley)

I imagine that there may be circumstances when a local authority may be a tenant of a property in a town centre and, by virtue of its tenancy, may be a ratepayer and bound to make a contribution within an area. I suspect that that reference is also included to give power to public bodies to pay if, after consultation with proposers and billing authorities, the public bodies wish to make a contribution.

Desmond Swayne (Conservative, New Forest West)

The first explanation is somewhat implausible, given that the clause refers specifically to additional contributions. If a local authority were a tenant or ratepayer as a consequence of its property in a town centre, it would fall outwith the arrangements and come under the other arrangements.

The Minister's second explanation was rather more plausible. It is rather worrying that a public authority could be required to make payments to the BID. It has been sold on the idea, as characterised in the description of the hon. Member for Kingston and Surbiton (Mr. Davey), of it being a voluntary tax. It was supposed to be taken on spontaneously by the community that will set up and run the proposals. It sounds fantastic, but if public bodies are to be required to contribute, that puts a rather different gloss on it.

Chris Leslie (Labour, Shipley)

I understand the hon. Gentleman's point. The clause ensures that a public body is empowered to make a payment if—once it has consulted those involved in drawing up the BID arrangements and the billing authority—that public body itself wishes to make a contribution. If it has given a commitment to make a contribution at the outset of the BID proposals, thereafter it is required by the BID arrangements to make that contribution. We have draft guidance that gives fuller information about such matters and I shall revisit the text of the draft guidance to make sure that that point is entirely clear.

Question put and agreed to.

Clause 45 ordered to stand part of the Bill.

Clause 46 ordered to stand part of the Bill.

Clause 47 - BID levy

Geoffrey Clifton-Brown (Conservative, Cotswold)

We must have a brief discourse on clause 47 to try and tease out from the Government whether the scope of the BIDs is unlimited. In the Bill there is no limitation at all. Could the whole of a local authority's area become a BID in itself? It would be interesting if the Government would explain that. Is there any scope for limiting the amount of money that can be demanded from an individual non-domestic ratepayer under the BID levy, other than the fact that

if it became too outrageous people would not vote for it?

I would also like to ask about one or two other problems that may arising from the BIDs. What will happen to empty properties? I know that empty properties get a rate relief after three months, but in such cases who is entitled to vote? Presumably, it will be the superior landlord to whom the liability is passing.

David Curry (Conservative, Skipton and Ripon)

They will have been commandeered in order to house people.

Geoffrey Clifton-Brown (Conservative, Cotswold)

As my right hon. Friend says, under this Government, if houses remain empty for more than a week, they will be confiscated. Then owners will not be non-domestic ratepayers at all. The Government will completely forfeit any money that they may have raised, which would be entirely self-defeating.

Nevertheless, it is worth establishing who will vote, and the arrangements that will be made for empty properties. What arrangements will be made for exceptional circumstances, such as flooding, riots, civil commotion or terrorist attacks? There appears to be no power in the Bill to suspend or cease a BID. Perhaps the Minister will explain what the Government would have in mind in such circumstances.

Desmond Swayne (Conservative, New Forest West)

Will the Minister give the Committee some idea of what the chargeable periods are likely to be? What do the Government envisage as being the likely lifetime of a BID and the process by which it would be renewed? Can he take the Committee through the Government's logic or is it all to be set out subsequently in regulations, to which little thought has yet been given?

Chris Leslie (Labour, Shipley)

Clause 47 states that the BID levy can be raised on ratepayers only while the BID arrangements are in force in that area. It also states that the duration of the BID, and therefore the period of time for which ratepayers will have to pay the additional levy, will be specified in the BID arrangements. However, to answer the point made by the hon. Member for New Forest, West, a related provision in clause 52 states that BID arrangements cannot remain in force for more than five years unless their renewal is approved in a fresh ballot of ratepayers. I hope that the debate on clause 52 will clarify those matters.

Subsection 47(3) provides that the BID levy will be calculated according to any method set out in individual BID arrangements. It is therefore not limited to being calculated on the basis of rateable value. It could be a flat rate levied on all properties, whatever their rateable values. However, from discussions with business organisations and rating professionals, we have concluded that the easiest and most popular way of calculating the levy is likely to be as a percentage of the rateable value of individual properties. Special provision may be needed to allow for the fact that charities or other non-profit-making bodies are less able to pay for the BID than profit-making bodies.

Advice on calculating the BID levy will be available in the guidance on BIDs that accompanies the Bill.

Geoffrey Clifton-Brown (Conservative, Cotswold)

The Minister skated over that arrangement quickly. This is new territory; it is a new announcement today. As I understood it, different arrangements can be made for charities and voluntary bodies, which may be exempt from non-domestic rates anyway. Will that apply in a particular BID, will the arrangements be set out in the initial BID document or will guidance be prescribed nationally?

Chris Leslie (Labour, Shipley)

It will be a combination. The guidance note touches on some of that. In general, the BID proposers will have to anticipate much of that, including the way in which they expect to levy a fair contribution from ratepayers across the BID area. Many of the arrangements and proposals will include many of those provisions. However, we shall certainly elaborate on some of those points in the guidance.

Geoffrey Clifton-Brown (Conservative, Cotswold)

I am sorry to press the Minister. I am still not clear whether there will be different arrangements for different BIDs and how they will be arrived at. Will there be guidance for each BID or will it be up to the local authority that draws up the arrangements in the first place to decide what provisions it will make for charities and voluntary bodies? One person's perception of what a charity or voluntary body can pay may be different from reality.

Chris Leslie (Labour, Shipley)

I understand the hon. Gentleman's point. We are trying to put in place a permissive framework, not only through the legislative provisions but through the guidance that will supplement them. There will not be individual guidance notes for each BID. We will set the framework out and make it possible for special provision to be made for charities or others in an area. Indeed, we may give guidance that that would be good practice, but many of the matters will have to be decided by those putting together the BID proposals.

The hon. Gentleman asked whether the scope of the BID was unlimited. It is not. It is largely constrained by the fact that the ratepayers must give their assent to the levy that they will have to pay. I do not believe that their rate burden can be doubled, unless for some reason they seek to make that level of contribution. We have the double lock in the voting provisions to ensure that both large and small businesses have a strong say in the outcome of that vote.

My understanding is that there will not be different provisions for empty properties, but that the normal arrangements for the collection of rates will apply. If a levy is a liability for a ratepayer and there is a vacancy in a particular property, that levy, like the rates, would fall on the person who would usually become liable for the empty property.

On powers to cease a BID midway, I doubt that that provision is necessary. However, as the hon. Gentleman knows, we may come to that later. The local authority has a veto on the proposals. There is also the power to appeal to the Secretary of State and so forth. The fact that the proposals have to specify very clearly at the outset the likely activities of the BID means that we anticipate that those matters can be dealt with then.

Geoffrey Clifton-Brown (Conservative, Cotswold)

I did not want to make a huge issue of the clause, because it is integral to the whole thing. However, the Under-Secretary said something that needs probing. He said that he doubts that there will be any need to suspend or cease a BID. Surely in the examples that I gave—severe flooding, riots, civil commotion and terrorist attacks—the whole purpose of the BID might be completely blown apart, to use an unfortunate pun. In circumstances involving such severe events, it might make sense to abandon the BID or, at least, suspend it. As I understand it, the Bill makes no provision for that.

Chris Leslie (Labour, Shipley)

As I said, we do not anticipate that those circumstances will arise. However, clause 56(4) gives a reserve power to the Secretary of State to alter or terminate BID arrangements, if required. We do not see such circumstances arising.

The hon. Member for New Forest, West asked about the chargeable period and wanted to know for how long the charge would be levied and when renewal would take place. As I said, the answer is five years. I think that I have answered those points and I hope that the Committee will support the clause.

Question put and agreed to.

Clause 47 ordered to stand part of the Bill.

Clause 48 ordered to stand part of the Bill.

Clause 49 - BID Revenue Account

Desmond Swayne (Conservative, New Forest West)

Subsection (4) states:

''The Secretary of State may by regulations make further provision in relation to the BID Revenue Account.''

Will the Under-Secretary tell us what sort of regulations will be made? I am still not clear in my own mind about the billing authority. Is it expected that each BID will set up its own such mechanism? Or will it typically be the case that the local authority will provide the billing authority function? In that case, the need for additional regulations would presumably be rather less than if the billing authority were to be created by the BID process itself.

Geoffrey Clifton-Brown (Conservative, Cotswold)

We need briefly to test the Government and to ascertain under what circumstances the local authority would have access to the BID account. What happens if the account goes unexpectedly into deficit? How is that deficit to be made up at the end of the BID process? Will it have to be repaid by the local authority or will it have to be repaid as a form of supplementary rate by those non-domestic ratepayers who are involved? That is an important question and we need answers from the Government.

Chris Leslie (Labour, Shipley)

The clause imposes a duty on the billing authority responsible for collecting the BID levy to hold the revenue that it collects on behalf of the BID in an account called the BID revenue account, which is separate from the billing authority's other finances, not least to give protection to those other finances.

That will also ensure that there is clear accounting for the BID arrangements. The money raised through the BID levy will therefore be ring-fenced and may be used only for BID purposes.

The billing authority must run the BID revenue account in accordance with ''proper practices'', which are defined in clause 21 and are the accounting practices to be followed by local authorities, including any specifically provided for in legislation. Therefore, if hon. Members were wondering about the particular rules that govern the revenue account arrangements, clause 21 will apply in the usual way to their operation.

Clause 49 gives the Secretary of State power to make further regulations relating to the BID revenue account, should that prove necessary. The hon. Member for New Forest, West asked about that. Those arrangements are set out in the guidance. In setting up the BID system, we want to be as flexible as we can in the arrangements set out. Experience over time may well show that we need to take certain lessons into account. Flexibility to make further regulations is necessary so that we can make changes to respond to any issues that crop up. We envisage that such issues will be of a technical nature, relating to financial audit.

On the question of what would happen in the event of unforeseen circumstances giving rise to a deficit, I shall have to write to the hon. Member for Cotswold. I need to find out more on that and shall provide him with information later. I shall ensure that I circulate that information to the rest of the Committee.

Geoffrey Clifton-Brown (Conservative, Cotswold)

I hope that the Minister, having given that helpful and courteous reply, fully understands that he needs to write to the Committee. How those deficits will be dealt with is important. Will he say under whose auspices the BID account will be audited and scrutinised? Will it be under the usual local government regime, so under the auspices of the Audit Commission, or under departmental spending, so under the auspices of the National Audit Office? Can he clarify that?

Chris Leslie (Labour, Shipley)

The BID revenue account will be held and run by the billing authority, so it will fall under the normal auditing and financial arrangements to which the billing authority is subject. In this case, the usual Audit Commission route will apply.

Question put and agreed to.

Clause 49 ordered to stand part of the Bill.

Clause 50 - Administration of BID levy etc

Edward Davey (Liberal Democrat, Kingston and Surbiton)

I beg to move amendment No. 97, in

clause 50, page 21, line 7, at end insert—

'(1A) Regulations under (1) above may specify that all or a proportion of the start up costs of a BID can be met from the BID levy.'.

This is a probing amendment, because I want to be sure for what purposes the proceeds of the BID levy can be used.

Geoffrey Clifton-Brown (Conservative, Cotswold)

On a point of order, Mr. Griffiths. I am sorry to interrupt the hon. Gentleman but, for clarification, can you tell us whether we are debating amendment No. 97, clause stand part and new clause 7, or will clause stand part and new clause 7 be debated separately?

Win Griffiths (Labour, Bridgend)

Clause stand part and new clause 7 will be debated together after this debate.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

Subsection (1) appears to give the Secretary of State the ability to make provision through regulation for the BID levy to be applied for, for a range of different matters. I am not sure whether the BID levy will be able to be used for the start-up costs of the BID. It is important to put that on the record and have clarification. I had hoped to look at the guidance notes, which the Minister kindly sent to all Committee members, but as hon. Members will recall, at the last sitting I was exceedingly generous and passed mine to the hon. Member for Cotswold, who appears not to have returned them.

Geoffrey Clifton-Brown (Conservative, Cotswold)

When I arrived in Committee this morning I found that I did not have those guidance notes. I am not sure whether I dropped them on the way, in which case the cleaner will have found them on the stairs and, no doubt, they will have ended up in the dustbin. I can assure the hon. Gentleman that I have been making frantic efforts to try to recover them during this sitting.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

The hon. Gentleman can only imagine my relief. I wait in anticipation of the return of the said document. It is possible that this issue is clarified in the guidance, which is why I had intended to refer to that. The point is important because people who want to set up BIDs will want to understand whether they will be funding the commencement, foundation and preparatory work from their own pocket or whether that will eventually come out of the proceeds of the BID levy. If the Under-Secretary replies that the BID levy cannot be used to recompense people for start-up costs, that is a concern. That could be a barrier to setting up BIDs because, although costs may not be huge, it is possible that in some areas, especially where there are small businesses and no large businesses prepared to stump up the money to get the project off the ground, there will be no one to lead the way in providing the necessary seed corn for start-up. If the Under-Secretary says that the BID levy cannot be used for that purpose, we might wish to divide the Committee on the amendment, although I intended it primarily as a probing amendment.

To make it clear to the Committee that there will be potentially significant start-up costs, bodies that have tried to pilot BIDs before this legislation reaches the statute book, such as the Circle initiative, have released documents to explain their experience of what is involved. The Circle initiative, in its document ''One year on'', shows that in the first stages—its step one, which it called ''building the partnership''—costs can be up to £20,000.

Chris Leslie (Labour, Shipley)

The hon. Gentleman makes a fair point on the clause, which provides powers to make regulations covering the ways in which local authorities may collect the BID levy from those liable to pay it. The amendment would include in the Bill that the regulations

''may specify that all or a proportion of the start up costs of a BID can be met from the BID levy''.

The amendment is not needed because anyone putting forward a BID proposal can include in it a provision that the costs incurred in developing the BID are to be covered by the levy, assuming that the ratepayers vote in favour of the proposal and the BID is established. I hope that that answers the hon. Gentleman's point and that he will withdraw his amendment.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

That is a very helpful reply. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

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

Win Griffiths (Labour, Bridgend)

With this it will be convenient to discuss new clause 7—BID: estimated bills—

'.—After section 41 of the 1988 Act insert—

A Billing Authority must, no later than 31st October in the year preceding a revaluation, send to nondomestic ratepayers an estimated Bill for the following financial year.'.

Geoffrey Clifton-Brown (Conservative, Cotswold)

I shall deal first with new clause 7. Some confusion arose because the original grouping placed clause stand part and new clause 7 with amendment No. 97, but I see that today's amended grouping separates them, as you kindly clarified, Mr. Griffiths.

New clause 7 is a probing new clause. Businesses must have time and certainty to plan. Under the non-domestic rating system, an estimate is sent out by, I think, the beginning of December, when the rates have to be paid at the beginning of April. The new clause tests the Government's intention in relation to BIDs. It seems wholly reasonable that there should be some prior warning when a BID is to be brought into operation as to what businesses are likely to have to pay. After all, every business will have to pay the supplementary rate. It would be useful to know what the Government's intentions are.

I wish to return to what happens when the financial arrangements of BIDS start to go wrong. I hope that they will not. If proper business plans are drawn up and followed, there will be no reason why the arrangements should go wrong. I hope that the BIDs are successful and exceed their business plan.

However, in the real world it is likely that the finances of some will go wrong. What will be the process when that happens? Presumably, the billing authority, which is to act as guardian of the BID finances, will have some idea that the BID is overspending. In the early years, that may not be a problem, but it would be interesting to know whether the billing authority will have the power to alter the multiplier, if that is how such adjustments will be made. The guidance clearly indicates that the two options available for recovering extra rates are a

multiplier and a supplement on the non-domestic rates bill, or a separate supplementary rates bill.

In the event that the financial governance is wrong, what arrangements are in the Bill for putting it right? The Under-Secretary will probably tell us that that falls under the powers of the Secretary of State. That may be so, but the Secretary of State intervening in every BID that goes wrong seems a very centralist mechanism for dealing with something relatively simple that should be handled locally.

Chris Leslie (Labour, Shipley)

The hon. Gentleman did not speak much to new clause 7, perhaps because there is some confusion about why he tabled it under BID arrangements, rather than revaluation, which is a subject that we shall discuss under part 5. The new clause proposes:

''A Billing Authority must, no later than 31st October in the year preceding a revaluation, send to nondomestic ratepayers an estimated Bill for the following financial year.''

I suppose that the hon. Gentleman could make his argument on the basis of revaluation in general, but that seems a tangential issue to the subject of BID arrangements. However, if that was his intention, so be it.

It would be difficult to apply the provision on the basis of BIDs, because it would be relevant only if the BID levy was calculated on the rateable value of property, which will not always be the case. Each BID will have the freedom to decide how it will calculate the additional levy, and we have set out the different options for such calculations in the working draft of the guidance.

Sending an advance bill would be expensive and unnecessary. Clause 62 states that a list of the rateable values of properties following a revaluation will be available six months before the revaluation affects ratepayers' bills. The information will be available and in the public domain. Ratepayers who also pay a BID levy could refer to it if they wanted to calculate the amount of their BID levy after the revaluation. Issuing another bill would be an additional and unnecessary cost to a local authority involved in a BID and would not apply if BIDs chose not to base the levy on rateable value.

Geoffrey Clifton-Brown (Conservative, Cotswold)

The new clause probably should have come under clause 62. Nevertheless, as I said in my opening remarks, there is a power in non-domestic rating to send out estimates. As the Minister will know, calculating provisional non-domestic rates is complicated. Even expert practitioners need to do incredibly difficult calculations, particularly when transitional relief is involved. The businesses involved in the BIDs are likely often to be very small, with meagre resources. They may be struggling to survive. Does the Minister envisage an estimate being sent out ahead of the bill that businesses in BIDs will receive on their doormats?

Chris Leslie (Labour, Shipley)

We may have an opportunity to deal with this later when we discuss revaluation in more detail, but we believe that the proposers of a BID will make the impact of any additional levy on ratepayers

widely known. The information provisions with respect to BIDs are sufficient.

We have deliberately introduced a clause to permit ratepayers more time to find out, in advance of revaluation, the potential changes to their liability. The current revaluation provisions do not include that. We are increasing the three months to six months. On balance, the extra cost and administrative burden to the local authority, in sending out two sets of rate bills, one of which would be far in advance of the new financial year, would be excessive. I hope that the hon. Gentleman will understand and accept that point.

The hon. Gentleman asked what would happen if BIDs got into difficulties and who would cover that. I gave him an undertaking to write to him with more information, but I want to clarify that there would be protection in the form of opportunities for the Secretary of State to intervene, if necessary, to alter or terminate BID arrangements. There is also guidance, and I am happy to say that I have a spare copy to offer to any member of the Committee who wants to see it.

On the deficit question, it is envisaged in the guidance that a BID would be likely to take the form of a company limited by guarantee. Therefore deficits would be the responsibility of the BID organisation. It would field any risks or liabilities in the way that any company limited by guarantee would do.

Geoffrey Clifton-Brown (Conservative, Cotswold)

I was making two different points. On the previous clause I wanted to know what would happen if the account were in deficit at the end of the BID. The point that I was making just now—and I think that this is a valid point for the Minister to consider—was that if it is clear during the life of the BID that the finances are going wrong, there seems to be no power in the Bill for the billing authority to alter the multiplier to put right the deficit. That would avoid a deficit to be dealt with at the end of the five years, when the BID came to an end. If it could be dealt with during the lifetime of the bid, those problems would be overcome.

Chris Leslie (Labour, Shipley)

I do not believe that billing authorities would be in a position to alter the multiplier halfway through the duration of a BID. The financial provisions—the levy on the ratepayers—would have to be clearly set out at the outset of the BID proposal. That is the question on which the ratepayers would vote. It would be wrong to make changes to it without their assent.

How the finances should proceed should be clearly calculated and set out to begin with, so that the levy would be known and the yield anticipated and so that the expenditure could be planned. I should find it difficult to conceive of circumstances in which the proposals would be likely to go astray halfway through, but I accept that it is possible. That is the reason for clause 65(4), which provides for regulations about alterations to BID arrangements.

Robert Syms (Conservative, Poole)

I rather suspect that the opposite problem may occur—that of BIDs building

up a surplus because of underprediction of rate income, interest on balances and difficulty in spending. If at the end of, say, 10 years the BID's operation suddenly stopped and there was a surplus, would that be returned to the businesses or allocated to another council budget? After all, if money is being collected from those businesses for a specific purpose which is no longer considered relevant, surely it should go back to those who paid it?

Chris Leslie (Labour, Shipley)

That is precisely the sort of issue that we hope BID proposers will anticipate at the outset: if they accrued a surplus, how would the money be used to supplement their plans as part of the BID proposals or could it in some way be returned to the ratepayers? We do not envisage that it will be a significant issue, because we expect that the proposers will be able to plan the yield and their expenditure and match the two. The money will not belong to the billing authority or the council; it cannot simply be subsumed because we have the provisions for a separate BID revenue account.

In the light of that, I hope that hon. Members will not press new clause 7 and will allow the clause to stand part of the Bill.

Geoffrey Clifton-Brown (Conservative, Cotswold)

The logic of what the Under-Secretary has said is that, if the surplus belongs to the ratepayers who have paid it, a deficit must also be paid by the ratepayers. However, he shakes his head. He has said that he will write to the Committee on that aspect.

I still find unconvincing the fact that the Under-Secretary cannot envisage that businesses must have some certainty to plan and will not be sent some form of estimate. That perhaps shows a lack of understanding on his part about the difficulty of calculating the rates payable under the non-domestic rating system. It is incredibly complicated. I repeat that many practitioners have difficulty in making the calculations when they have to appeal against a non-domestic rating liability. Therefore, particularly in the computer age when calculations can be done fairly easily once the different factors are put into the equation, and especially if the Under-Secretary does not envisage a huge number of ratepayers in any individual BID, it should be relatively simple for those with the software to send out the estimates. I suspect that the matter will be probed elsewhere.

Having said that, I think that we have exhausted this matter for the time being, so I shall not persuade my hon. Friends to vote against the clause standing part of the Bill.

Andrew Turner (Conservative, Isle of Wight)

I apologise to my hon. Friend if, by speaking, I slightly contradict him, but I do not believe that we have exhausted one or two issues.

As we go through the debate, my feelings are mixed as to whether I congratulate the Government on producing a proposal, however relatively ill formed, that they hope will be flexible and will apply in different circumstances that are difficult to foresee, or ask them more detailed questions which, in the nature of things, they will find it difficult to answer.

First, the money collected by a BID will be retained by the local authority, but presumably in a form of trusteeship, on behalf of those who are designated in the BID framework and have the authority to spend the money. I am sure that the Under-Secretary will correct me if I am wrong, but that body might be a chamber of commerce, a local branch, a town traders' association or something of that kind. It might be a town council. In the absence of a town council, it might be a form of local partnership. I assume that, as long as the body is set out in the BID arrangements, that will be satisfactory. I see the Minister nodding. I see the Under-Secretary nodding. Will the money be subject to district audit procedures, or would there be separate auditing requirements for the money, which, although held by the authority, is the property of another group?

The Minister is sanguine about people's budgeting arrangements. He seems to think it unlikely that the circumstances that my hon. Friend the Member for Cotswold described—a BID running out of money halfway through—would arise.

I have to tell the Minister that people's capacity to get budgets wrong is a wonder to behold. My local authority, for example, budgeted to run a pop concert at a cost of £60,000 and was surprised to find that it cost £380,000, which is the equivalent of an £8 per household levy on the ratepayers of the Isle of Wight. Even with high quality professional financial advice, local government gets things wrong. We therefore need to push the Minister a little further on what happens if the BID proposals do not work. If a local authority has collected the money there will be an income stream. If it finds out halfway through that it will need much more money, it will have either to alter its income stream or to abandon the proposal because it simply does not work.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

Does the hon. Gentleman not realise that businesses will be running the partnership arrangements? That means that many of his points do not hold. Is he saying that if there were a BID on the Isle of Wight, he would be concerned about the ability of businesses in his constituency to run it?

Andrew Turner (Conservative, Isle of Wight)

Not half as concerned as I would be about the ability of some other organisations to run such a scheme. I am sure that the businesses would have no difficulty in running the scheme, but that does not alter the fact that it is possible to make serious errors in one's budgeting arrangements. When a business takes a risk, it calculates the risk and knows what will happen. If it does not get the income that it expected, it goes bust, which is a serious threat that it takes into account in calculating its expenditure.

Can a BID go bust? I simply do not know. Who has the authority to call a pause on a BID? Will the Minister step in? Will the local authority treasurer have to report that the BID income stream is not working? Will the businesses be expected to manage the money? I hope so. The Minister has not explained those points, and it is unwise of him to brush off the possibility of an income stream faltering or being found inadequate.

Geoffrey Clifton-Brown (Conservative, Cotswold)

The hon. Member for Kingston and Surbiton brushed aside my hon. Friend's valid point. Although an individual business can, of course, control its budgets, we are not talking about individual businesses. We are talking about different sizes and types of businesses and other partners such as the voluntary sector, the charitable sector and the local authority sector. We have not talked about what happens with different local authority departments and Government Departments that may have property within a BID area and therefore be involved. There is range of reasons why BIDs could go wrong.

Andrew Turner (Conservative, Isle of Wight)

My hon. Friend assists me greatly, because that is the exact problem. Even businesses sometimes manage to get their budgets and resources wrong.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

First, I must clarify the fact that I was trying to help the hon. Gentleman because he seemed to think that BIDs would be led and financially managed by local authorities. Although I hoped that I had helped him, I clearly had not. Secondly, the financial management of a BID will be rather easier than that of many businesses, because revenue and expenditure will be clearly set out and predictable. Demand risk, which is one of the key issues, and the potential variability in supply costs are the sort of problems that affect commercial enterprises, and, indeed, some public sector organisations. That sort of risk will not exist within a BID.

Andrew Turner (Conservative, Isle of Wight)

If the hon. Gentleman is saying that a BID is unlikely, or indeed cannot be used—[Interruption.] He says that he is not saying that—but if a BID cannot be used to provide the seed-corn for a risky enterprise such as a pop festival, which businesses may think is a jolly good idea because it will bring lots of people to the area concerned, some of my concerns fall. However, I can see nothing to prevent a BID from being used for that purpose. Such an investment is, by the nature of things, risky and can lead, as it regrettably did in my constituency last year, to a loss not of £60,000 but of £380,000. Unfortunately for the council tax payers, but fortunately in other respects, there was a pocket—the council tax payers' pocket—that could pay for that loss and make it up.

In the case of a BID, no body can provide the income stream to make up for an unpredicted loss. The Minister gets my drift, even if the hon. Member for Kingston and Surbiton does not. I know that my hon. Friend the Member for Cotswold on the Front Bench gets my drift, too, because he said so.

Robert Syms (Conservative, Poole)

A BID scheme will exist for a limited period. A scheme will be put up and people will understand what is happening. If you wanted to improve the centre of one of our cities, the expenditure would inevitably be at the beginning of the process rather than being spread evenly throughout it. You might have to spend considerably more money in the early years than you would in the later years.

Win Griffiths (Labour, Bridgend)

I would not.

Robert Syms (Conservative, Poole)

No, you would not, Mr. Griffiths.

The Bill makes it clear that if a local authority is putting up a scheme that will have an income stream

over 10 years, it cannot borrow against that income stream. Can those within a BID borrow against that income stream in order to undertake works and use the income to pay off the cost over several years? If not, there will be cash flow problems, because it is highly unlikely that they will be able to organise their affairs in order to spend equal money in each period of the 10-year BID. Would that just be in the nature of the scheme, because the money would be front-loaded and the income would pay it off? In other schemes, would the financial management be done on a year-by-year basis? It would be interesting if the Minister could set the situation out. If borrowing is not allowed, it will severely inhibit the benefits of the policy.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

I rise to clarify the Liberal Democrat position, which is being misrepresented by some Conservative spokesmen. When we look back at the last sitting, in which we debated BIDs, it will be difficult to clarify the Conservative position.

The concern that Conservative Members are voicing is valid because we need to know what would happen if a BID did not have the money to pay its bills. That is a clear question, and the Committee needs to know the answer. My point in my intervention on the hon. Member for Isle of Wight was that it would take a high degree of mismanagement by the businesses that led a BID for it to fail, because the way in which the BID framework is set up should make everything relatively predictable.

The hon. Gentleman referred to a pop concert on the Isle of Wight—a story with which he has previously entertained the Committee. I do not know whether a pop concert could be funded by a BID. I imagine that the BID proposal would have to set out that a pop concert was one of the projects that the BID revenue was going to fund. If that were the case, I can imagine many businesses not voting for it, because they would not want to pay for it. If, however, they all thought that it was the way to transform their town centre, maybe they would vote for it.

Desmond Swayne (Conservative, New Forest West)

They would be daft.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

The hon. Gentleman, in his inimitable style, says that he doubts that that would happen, and I have to agree.

Will the Under-Secretary explain whether it is the Government's intention to deal with the matter through the powers of regulation in subsection (1)? That gives the Secretary of State power to make provisions with respect to the application of BID levy. Do the Government intend to say that there are certain risky ventures for which BID revenue could not be useful?

Chris Leslie (Labour, Shipley)

The hon. Gentleman has largely grasped the way in which we envisage business improvement districts will work. Several protections will be put in place, predominantly through the assent of the ratepayers of the business improvement district. Through the simple majority and the aggregate rateable value vote, businesses have control at the outset if they see any part of the proposals that might be likely to go awry. Given that the levy and the

proposals are all set out in advance, they should be clear about what they can anticipate.

We do not want the system to be too prescriptive. We want to see how the pilots work out. My hon. Friend the Member for Brighton, Pavilion, who sits on the steering group, will know that we shall watch carefully how they develop, and any problems or anomalies that they encounter. We shall not be rigid in considering whether the guidance will need changing in future, and so forth.

The hon. Member for Isle of Wight asked questions about where the money is held and retained. During the debate on an earlier clause, we said that the conception of the BID revenue account will be subject to the normal arrangements that other billing authority accounts are subject to, such as district audit and so forth. I hope that that answers the hon. Gentleman's questions.

I do not dismiss the possibility, which always exists, of a measure of risk. There is a risk to everything in life, but I think that the risk in this case is minimal. There is always a measure of risk related to income streams changing over time. I would not want to brush over that, and I was not intending to do so. We shall put in place measures to review the pilots. It might also be appropriate, as we are considering draft guidance for the BIDs, to consider whether we can add more detail concerning financial liability issues. That would be a reasonable point to make. In the document, we said that we envisaged a BID being a company limited by guarantee. That gives protection when things go wrong.

The hon. Member for Poole asked whether a BID would be able to borrow. I am not sure that ''you'' would be able to borrow, but if ''one'' were a BID, one would be able to borrow a certain amount. Given that they have a fairly short lifespan—about five years—it is unlikely that BIDs would enter into anything other than short-term borrowing arrangements. That would be possible if a BID were a company limited by guarantee, but the normal constraints on short-term borrowing would apply. I hope that those comments answer the points raised, and that new clause 7 will not be pressed.

Geoffrey Clifton-Brown (Conservative, Cotswold)

I suspect that the Under-Secretary is making policy on the hoof because he has not thought matters through. He has now come up with the wonderful idea that there will be a company limited by guarantee. When things go wrong, such a vehicle has to cease. Therefore, there must be a power to terminate the BID when financial improbity or excess takes place. There is nothing in the Bill, other than the Secretary of State's power, that can terminate BIDs. Perhaps the Minister would clarify the matter. Would it not be much better, when things go wrong—provided that the administration was still going on and the BID was still performing its original functions and purposes—for the Secretary of State to issue guidance or instructions that would allow the billing authority to alter the multiplier during the course of the BID, so that more money could be raised, especially as doing so might be justified on the ground that the bid would then succeed? I would be grateful if the Minister would answer that question.

Chris Leslie (Labour, Shipley)

As I said earlier, these are fairly minimal risks. Although I do not dismiss them, we need not give them disproportionate consideration. Protections are given in the BID guidance; I shall pass a copy to the hon. Gentleman, because I suspect that he did not read that part of it. It says on page 24 that BID boards need to decide an appropriate form, and that a BID company limited by guarantee has a number of advantages, not least that it can be wound up in the normal way. The question of continuation is not a problem. Clause 56(4) gives the Secretary of State the ability to make regulations on the termination of BID arrangements.

David Lepper (Labour/Co-operative, Brighton, Pavilion)

I was about to defend the Minister against the accusation that he was making policy on the hoof, but it proved to be unnecessary—he defended himself admirably. I reaffirm what he said, and draw the attention of the hon. Member for Cotswold to the guidance referred to by the Minister and the information about the preference for a company limited by guarantee on page 24. The guidance has been available to Committee members since we began our deliberations; it would be a pity if the hon. Gentleman has mislaid that document as well as the one that he borrowed from the hon. Member for Kingston and Surbiton earlier in the week.

Chris Leslie (Labour, Shipley)

My hon. Friend is entirely correct; the BID guidance document has been made available to all members of the Committee. I shall make sure that, as soon as possible, the usual channels provide him with the spare copy that I took to replace the copy that I gave the hon. Member for Kingston and Surbiton to replace the copy that he gave the hon. Gentleman. The hon. Gentleman's collection of BID guidance documents seems to grow by the day.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

Just to ensure that it is on record, I hope that the Minister will say that the Government have no intention of being over-prescriptive on the form that BIDs can take. A company limited by guarantee is a good idea, but one can imagine other methods of incorporation—or even non-incorporation such as ordinary partnerships. We need experimentation in order to see what works best. A company limited by guarantee might work best in some areas and town centres; a partnership might be better in others.

I urge the Minister not to give the local authority the power to vary the rate multiplier as suggested by the hon. Member for Cotswold. I found it surprising that the hon. Gentleman should want to give local authorities the power to increase taxes on business, but it would be a bad move because it would deter people from signing up to BIDs. They need to be certain how much it will cost them.

Win Griffiths (Labour, Bridgend)

Order. I urge hon. Members to be brief in their interventions. I have been rather generous this morning, but I would be pleased if the Committee would tighten up in that respect.

Chris Leslie (Labour, Shipley)

Those are wise words, Mr. Griffiths, although I appreciate the comments of the hon. Member for Kingston and Surbiton, who is now an

enthusiastic convert to the wonders of BIDs. We welcome him on board.

The hon. Gentleman was right to say that it would not be wise to allow that supplementary alteration to the levy. I am glad to put on the record that I agree that we would not want to be prescriptive and always have a company limited by guarantee. There are other forms of partnership that offer a level of protection. We want BIDs to make their own judgments about that locally. The businesses that vote and the people who pay will make their own judgments about security and about the potential for the BID to succeed and will exercise that judgment when they vote.

Question put and agreed to.

Clause 50 ordered to stand part of the Bill.

Clause 51 - BID proposals

Win Griffiths (Labour, Bridgend)

With this it will be convenient to discuss new clause 6—Notification to non-domestic ratepayers of BID proposal—

'Prior to the holding of a ballot of relevant non-domestic ratepayers in accordance with section 51(1), the billing authority shall take all reasonable steps to ensure that every non-domestic ratepayer eligible to vote in the ballot shall receive such information regarding the BID proposal and such information as will facilitate, each such non-domestic ratepayer being able readily to calculate the amount of BID levy that will be payable by him, as the Secretary of State shall prescribe.'.

Geoffrey Clifton-Brown (Conservative, Cotswold)

I had not anticipated such a long debate this morning on the administrative matters affecting BIDs and I shall therefore move new clause 6 fairly quickly. It builds on what we have already discussed.

The new clause is pretty straightforward and would impose a pre-ballot requirement on those who draw up the BID proposals. After all, there would be no point in drawing up proposals and going to the trouble of a ballot unless one took the maximum trouble to ensure that it succeeded; that would be a complete waste of time and money. The new clause is intended to ensure that every non-domestic ratepayer eligible to vote in a ballot would receive the relevant information about the BID proposal

''and such information as will facilitate, each non-domestic ratepayer being able readily to calculate the amount''.

Those last few words are the important ones. I do not think that the Minister really understood what I was trying to say about this issue earlier, or that he has tried to calculate the amount of non-domestic rate payable. It is horrifically complicated, particularly where transitional arrangements are involved.

Many BID proposals will involve small businesses with very limited resources, time and personnel for calculating what they are likely to have to pay.

Patrick Hall (Labour, Bedford)

rose—

Geoffrey Clifton-Brown (Conservative, Cotswold)

If someone is going to have to vote on a scheme, they need a fair idea of exactly what they will have to pay. If the average small business is told simply that the multiplier on its non-domestic rate

is X, that is almost as good as sending out a notice in Greek.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

Will the hon. Gentleman give way?

Geoffrey Clifton-Brown (Conservative, Cotswold)

No. I have been asked by the hon. Member for Bedford (Mr. Hall) to give way, and I shall happily do so. We need from the Government an idea of how the information is to be disseminated. If matters get to the point of a ballot, it is surely in everyone's interest that it should succeed.

Patrick Hall (Labour, Bedford)

(Bedford) I do not follow the hon. Gentleman's argument about the immense complication and difficulty for business partners in a BID scheme of working out what they will have to pay. The scheme will have to specify in advance that it will apply a figure of 1 per cent. or 5 per cent., for example, of the business rate bill. All that businesses will have to do is apply that simple percentage to what they pay. Surely they are capable of that?

Geoffrey Clifton-Brown (Conservative, Cotswold)

I suspect that the hon. Member for Bedford and the hon. Member for Kingston and Surbiton will try the same tack, which shows that they do not know how the system works. I assure hon. Members that they will find out, on reading some of the formulas that we shall discuss in a little while, how difficult it is in the non-domestic rates system to calculate the actual amount payable, which is what businesses will be interested in. They might want to ask themselves, after studying those formulas, how easy it would be for them to work out, given the multiplier, the amount payable. It will be interesting to hear what they have to say.

Win Griffiths (Labour, Bridgend)

I remind hon. Members that although we are debating new clause 6 it will be moved and, if necessary, voted on only at the appropriate point later on.

Desmond Swayne (Conservative, New Forest West)

The hon. Member for Kingston and Surbiton spoke of the need for financial certainty to generate enthusiasm for the BID, and the Under-Secretary readily agreed. Therefore, when we come to that part of our proceedings, I fully expect him to say that he will accept new clause 6, because it self-evidently supports the sentiments that he has agreed to.

Will the Minister tell us the meaning of

''as to the persons who may draw up BID proposals''

in subsection (2)(a)? Will the local authority be among those who draw up the proposals, or will that be confined exclusively to the community as represented by the business, town centre or whatever group sets up the BID? It is important to give an indication of the extent to which local authorities are intimately involved in the process.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

I urge the Minister not to accept new clause 6. It is a centralising measure asking the Secretary of State to prescribe the information that those who draw up local BIDs will have to provide. That goes against the thrust of the way in which successful BIDs—

Desmond Swayne (Conservative, New Forest West)

Moments ago, the hon. Gentleman was chiding my hon. Friend on how simple it would be

to provide precisely the information set out. The information is elementary and would generate enthusiasm for the BID. It is remarkable that he considers such an elementary condition to be so onerous and centralising.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

I am not against that essential and easy piece of information being provided, but I want local people to decide what information is provided. I do not want to give the Secretary of State the power to prescribe everything in every BID throughout the country. That would go against the thrust of the BID proposal.

I hope that people who are establishing BIDs—I hope that this helps the hon. Gentleman—will provide a whole range of information that is relevant to their areas and to people and businesses in their areas. I do not want the Secretary of State to be able to intervene and make prescriptive regulations in every case.

Geoffrey Clifton-Brown (Conservative, Cotswold)

I think that the hon. Gentleman has misunderstood the purpose of new clause 6. It is not the Secretary of State who must give the information. The Secretary of State draws up the general guidance on how such things will be done and it is then up to the people involved to decide how the information is disseminated. I am making the point as clearly as I can. If we do not disseminate information properly, there will be less chance of the ballot succeeding.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

That is why the people in the area will provide the information and why I do not want the Secretary of State to prescribe it. The last seven words of new clause 6 are

''as the Secretary of State shall prescribe.''

Geoffrey Clifton-Brown (Conservative, Cotswold)

Prescribe generally.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

That seems to be giving a power to the Secretary of State. I want the powers covering information to be given to local businesses that are pushing for BIDs. The best way in which to ensure that the vote will succeed is to provide information to voters. I urge the Minister not to take the extra powers that are being offered to him by Conservative Members.

Robert Syms (Conservative, Poole)

I should declare an interest, which is listed in the Register of Members' Interests, as the director of a family property company. I should have done that when I last intervened and I hope that hon. Members are fully aware of my particular interest.

The arrangements for the BID proposal make it quite clear that a proposal could come from business or a local authority. I suspect that any sort of proposal will be in the nature of some sort of bargain in that a local business will be told, ''You contribute more to improve the environment.'' Within that, there should be some guarantees that the local authority or authorities involved will join that bargain. Retailers could be told, ''Make a contribution and we'll improve the area.'' If, a year later, the council changes its car-parking policy, making life difficult for retailers, puts in one-way systems or introduces a congestion-charging scheme for a central area, that may obviate or offset the benefits of the investment to local business.

As a number of things may have an impact on the centre of a city that one wants to regenerate or improve, if people are voting to contribute additional money for five years to improve the centre of a city, there must be a clear statement of the local authority's strategy and policy for the central area when a proposal is put up. It must be overt about whether it wants to change car-parking policy. I have often found that changes in car-parking charges make a tremendous difference to retailers' ability to undertake their business. Therefore, it would be perverse if, having acquired a majority of local businesses and got people signed up to proposals for improvement, the local authority, under understandable financial constraints, suddenly changed a major part of the business environment in a way that offset the benefits of a BID.

I hope that when the Government draw up guidance, it will ensure that local authorities that will have an impact on the business areas must set out their realistic proposals for the future, so that BID proposals are not offset by other parts of policy and we have joined-up government.

Chris Leslie (Labour, Shipley)

New clause 6 would require a billing authority to ensure that ratepayers received all the relevant information needed to make an informed decision, including a method to calculate the amount of their individual levy. Clause 51 empowers the Secretary of State to make regulations concerning the persons who may draw up the BID proposals, the procedures that must be followed when they are drawn up and the matters to be included in them. It renders new clause 6 redundant, because the new clause would allow the Secretary of State to prescribe the information to be given to ratepayers about a BID proposal. That power already exists to a large extent in clause 51(2).

The draft BID guidance that was sent to hon. Members contains information about the requirements to inform ratepayers of the proposals and how to calculate the BID levy. The guidance suggests on page 22 that the BID should give the figure that ratepayers would be expected to pay in addition to their rates and an indication of the way in which it is calculated. On page 23 it says that the BID proposal should also set out the arrangements for publicising the proposals before the vote takes place. In other words, the issue is amply covered in the guidance. Information about the amount that they will pay will go to BID ratepayers before the ballot.

The hon. Member for Cotswold asked how the figure would be calculated and whether it would be too complicated. I do not believe that it is a particularly difficult point, as my hon. Friend the Member for Bedford said. The figure should not be difficult to calculate. It could be a percentage, a flat rate, or any other system. We do not want to be too prescriptive about it, but if businesses were suspicious about the amount that they had to pay, they would be less likely to vote in favour of the proposal.

The hon. Member for New Forest, West asked who would be involved in drawing up the BID proposals.

Anyone can get involved in establishing a BID. The local authority will need to be a partner, because it will be an important stakeholder in the relationship between the business community and the public sector. That touches on the point made by the hon. Member for Poole. BIDs will have to make sure that the local authority is fully engaged. They will clearly have a strong voice in the dialogue with the local authority.

The guidance elaborates on some of those issues when dealing with the possible virtues of the establishment of a BID. There are no absolute constraints on the choices that a local authority can make during the duration of a BID about its normal functions, but clearly it is accountable to its electorate for its decisions on non-BID issues. Questions about car-parking charges and changes involving one way systems will be part of the normal decision-making processes of local authorities, which are democratically accountable to those who elect them. In that sense, there is a constraint on those local authority decisions. I take the point made by the hon. Member for Kingston and Surbiton, who said that new clause 6 could be interpreted as slightly over-prescriptive. There is ample coverage in the guidance and the Bill, and I hope that new clause 6 will not be pressed.

Question put and agreed to.

Clause 51 ordered to stand part of the Bill.

Clause 52 - Approval in ballot

Geoffrey Clifton-Brown (Conservative, Cotswold)

I beg to move amendment No. 114, in

clause 52, page 21, line 34, leave out 'two' and insert 'four'.

Win Griffiths (Labour, Bridgend)

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

No. 101, in

clause 52, page 21, line 34, leave out from 'unless' to 'a majority' in line 35.

No. 74, in

clause 52, page 21, line 36, at end insert—

'(2A) For the purposes of the first condition no person shall be entitled to more than one vote.'.

No. 102, in

clause 52, page 21, line 37, leave out from beginning to end of line 3 on page 22.

No. 100, in

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

'(5A) The third condition is that at least 25 per cent. of those eligible to vote shall have voted in favour of the BID proposals.'.

No. 115, in

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

'(5B) The fourth condition is that C exceeds 25 per cent. of D.

(5C) C is the aggregate of the rateable values of each heraditament in respect of which a person voting in the ballot has voted in favour of the BID proposals.

(5D) D is the aggregate of the rateable values of all heraditaments in respect of which a person is liable for the proposed BID levy.'.

No. 117, in

clause 56, page 23, line 17, leave out 'two' and insert 'four'.

Geoffrey Clifton-Brown (Conservative, Cotswold)

This is a large group of amendments. We now come to the interesting subject of ballots. I suspect that we will have to rehearse the arguments that we had in relation to the Regional Assemblies (Preparations) Bill all over again. I make no excuse for that. If people are to go to the trouble of having a ballot, it should have legitimacy. After all, that is what democracy is all about. Amendment No. 114 is intended to facilitate the other amendments in the group. I will not speak to the two amendments tabled by the hon. Member for Bedford, because I am sure that he will do that very adequately himself. I will simply speak to my amendments.

When I read amendment No. 74 late last night, I wondered why I had tabled it. I think that it is intended to probe and ascertain what happens when somebody occupies more than one premises. Will they be allowed more than one vote? That is a pretty simple and straightforward question.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

May I help the hon. Gentleman? I believe that the amendment was tabled after both his amendments and my own relating to putting property owners into a BID in the Bill. If that were done, amendment No. 74 would ensure that some property owners did not have more than one vote in relation to the first condition.

Geoffrey Clifton-Brown (Conservative, Cotswold)

I am not sure whether that was intended to be helpful or mischievous—probably a touch of both. Nevertheless, having dealt with amendment No. 74—

Chris Leslie (Labour, Shipley)

May I help the hon. Gentleman?

Geoffrey Clifton-Brown (Conservative, Cotswold)

No, I shall not give way to the Under-Secretary, and I do not need any further help; I have had enough mischievous help. There is still a valid point about whether someone is entitled to more than one vote. The Under-Secretary needs to give the Committee some guidance on that.

Chris Leslie (Labour, Shipley)

I have just tried.

Geoffrey Clifton-Brown (Conservative, Cotswold)

We now come to the meat in the group of amendments. Amendment No. 100 would mean that there was a third condition. The first two conditions in the Bill are quite clear. The first condition

''is that a majority of the persons voting in the ballot have voted in favour of the BID proposals.''

That is perfectly straightforward. The second condition is that the total rateable value of those who vote in favour of the proposals must exceed that of those who do not. In the interests of probing a way through the clause, may I ask the Under-Secretary, on the calculation of the rateable values, whether one especially large occupier of a building, with a rateable value exceeding those of all the other voters, would be able to veto the whole scheme?

Robert Syms (Conservative, Poole)

Yes.

Geoffrey Clifton-Brown (Conservative, Cotswold)

As I read the Bill, and when I probe the matter by reducing the argument ad absurdum, that would be the case.

Amendment No. 100 is the minimalist provision, and would introduce a threshold. One can argue about the size of that threshold. Reading the Hansard reports

of the rather long debates that we had on that subject in the Regional Assemblies (Preparations) Bill—

Desmond Swayne (Conservative, New Forest West)

Hear, hear.

Geoffrey Clifton-Brown (Conservative, Cotswold)

I am not sure whether my hon. Friend is encouraging me to have a long debate on the subject. He is shaking his head. I am pleased to hear that.

Nick Raynsford (Labour, Greenwich and Woolwich)

So are we.

Geoffrey Clifton-Brown (Conservative, Cotswold)

We can argue about the size of the threshold, but having been through this course before, we think that 25 per cent. is reasonable. Again, to take the argument ad absurdum, we could find that 26 per cent. of the people voted, 25 per cent. being against and 1 per cent. in favour, and, under our suggestion, the proposal would still succeed. However, we would probably have up to 50 per cent. voting, of whom half would have to vote in favour.

Unless at least a quarter of the people are in favour of such proposals, I feel that they should not succeed. One could argue about the threshold; there were different thresholds in the Greater London Authority Act 1999 and Scottish legislation. The threshold for Scotland was 40 per cent. and for Greater London 25 per cent., so when 25.5 per cent. voted in favour, the threshold was just met. The core theme of amendment No. 100 is that there should be a threshold. I am not saying that 25 per cent. is necessarily right, but to take the argument ad absurdum again, let us suppose that just one person voted in favour of the proposals and the others did not vote. The Under-Secretary adduced a long argument to persuade us that abstentions were in effect votes against. In case he adduces that argument today, I should explain that in the example that I gave, 99 per cent. could be against and 1 per cent. in favour, but that 1 per cent., under the Bill's terms, would carry the day and the scheme would succeed.

Chris Leslie (Labour, Shipley)

If at the next general election, when the hon. Gentleman submits himself to the good people of Cotswold, all the electors abstain save one, and that one—himself, presumably—votes for him, will he refuse to serve as the Member of Parliament for Cotswold?

Geoffrey Clifton-Brown (Conservative, Cotswold)

I am pleased to say that I have a unique feature: I am the only Conservative Member of Parliament who has increased his majority successively in the last three elections. I do not know whether the good people of Cotswold will continue that wonderful trend or not, but I hope, subject to their wishes, to be here for a long time to come. The Under-Secretary is very young, so I am not sure whether I will outlive him, but I intend to be here a long time—as I am sure does he. [Interruption.] I did not catch that remark made from a sedentary position. Does the Minister for Local Government and the Regions wish to intervene?

Nick Raynsford (Labour, Greenwich and Woolwich)

I was simply observing that, according to the logic of his recent observation, the hon. Gentleman can probably look forward to being the leader of the rump Conservative party after two further elections.

Geoffrey Clifton-Brown (Conservative, Cotswold)

The Minister's suggestion is totally misconceived. It will not be a rump party at all. The longevity of his Government might not be quite as great as he thinks. We shall have to wait and see what the British people say about that.

Win Griffiths (Labour, Bridgend)

Order. Will the hon. Gentleman speak specifically to the amendment?

Geoffrey Clifton-Brown (Conservative, Cotswold)

Yes, Mr. Griffiths. I was being tempted down a path that was all to do with elections.

If the Under-Secretary is going to adduce the argument that abstentions are in effect no votes, if just one person voted and was in favour, under the ballot as proposed in the Bill, even if 99 per cent. of the people were against, according to his argument, the whole thing would still go ahead. That points to the absurdity of not having some form of threshold built into the ballot.

David Lepper (Labour/Co-operative, Brighton, Pavilion)

Has the hon. Gentleman read page 10 of the guidance notes, which have been referred to quite frequently during the debate? It states:

''Notice of the ballot must be given to all ratepayers qualified to vote on a BID, at least 56 days in advance.''

That will be preceded by a fairly extensive period of debate—locally, I would imagine—involving all of those eligible to vote, about the pros and cons of establishing a BID. With the guidance to which I referred, and the likelihood of a long local debate, the turnout in such a ballot is likely to be far higher than he has suggested. Undoubtedly, those who do not wish to see the BID established will vote against it, rather than abstain.

Geoffrey Clifton-Brown (Conservative, Cotswold)

The hon. Gentleman might have a magic wand, but in the real world there is no such thing. One can encourage people to vote, but that does not mean that they actually will. One can take a horse to water, but you can't make it drink.

Paul Goodman (Conservative, Wycombe)

Very profound.

Geoffrey Clifton-Brown (Conservative, Cotswold)

My hon. Friend says ''very profound''. Sometimes, in order to get a point across to some people, a point has to be made in a profound way—or a less profound way—according to the level of whomever one is trying to make the point to. I must not go too far down that road.

The argument has been reduced to the absurdity of the scheme being carried even if only one person voted. We are finding in democracies that the turnout is dropping and dropping. Every politician and everyone who takes part in the democratic process should be acutely worried about turnouts. If turnouts are dropping and dropping, elected bodies do not have a democratic mandate or legitimacy. The same thing applies under the BID procedure. I am not saying what the percentage should be, but a figure of 1 per cent., 5 per cent. or 10 per cent. would be unacceptable. I put it to the Committee that anything less than 25 per cent. would be unacceptable; the BID would not have proper legitimacy in the eyes of the businesses and other partners involved.

Patrick Hall (Labour, Bedford)

Thresholds are a difficult matter of judgment. Would the hon. Gentleman agree that, generally speaking, the Conservative party claims to understand business, and claims to be its voice in Parliament? Why is the hon. Gentleman not putting forward the suggestion of the Federation of Small Businesses, which says that the threshold for turnout should be 75 per cent., not 25 per cent.?

Geoffrey Clifton-Brown (Conservative, Cotswold)

I do not speak for the Federation of Small Businesses. I try to take a rational and reasonable approach. The figure of 75 per cent. probably arises from the fact that the Federation of Small Businesses is worried about the additional burdens and costs that BIDs will impose on small businesses. I think that it has a legitimate point of view, which the Government should take cognisance of in drawing up the proposals. The fact that the Minister dismisses so lightly the failure to supply proper estimates or financial information shows that there is no proper understanding of the difficult circumstances that some small businesses face. That is particularly true for one, two or three-man businesses, which work huge numbers of hours a day to keep the business going.

Such businesses already have to deal with matters such as VAT and tax. Now another administrative burden is piled on top of a whole range of bureaucratic burdens that the Government have already piled on top of them. A letter will come flying through the post about BIDs, which they have never heard about. They do not know what the system is, or what is involved. That is another thing that they will have to get to grips with. Surely we in the Committee must come up with something that is easily understood and easily computed into a business plan so that a business man can decide whether the scheme will benefit his business or the wider area. He can then start to make some relatively easy judgments. If the system is to have democratic legitimacy, the Government should seriously consider whether there should not be a threshold in the ballot.

The fourth condition would, on the basis of rateable value, safeguard the majority of those who vote in favour of the BID. Again, one could argue about what the figure should be. If one were being realistic about it—I read the guidance and considered the matter very late last night—the figure of 25 per cent. in amendment No. 115 is probably too high. It should, perhaps, be nearer 10 or 15 per cent. However, there should be some threshold for the aggregate of the rateable values. Amendment No. 117 would safeguard the position by allowing the third and fourth options.

I am sure that the hon. Member for Bedford will speak ably to his amendments Nos. 101 and 102, but he is on to something. A simple majority should be built into the system, as he suggests in amendment No. 101. I am not sure what he hopes to achieve by deleting the third line of subsection (6). He may be trying to eliminate any ratepayers' veto. That would be unfair, because the ratepayers will have to pay for the BIDs. If the scheme is to have legitimacy, the aggregate of the value of the ratepayers who vote for it should exceed the aggregate of the value of those who vote against it. We are not concerned simply with numbers in the

ballots. The Government recognised that by including the B option, and it would be a retrograde step to take it out.

Patrick Hall (Labour, Bedford)

My amendments have not yet attracted massive support, as can be seen from the amendment paper, but I would like to explain why they should. Before I do so, I wish to comment on the Conservatives' approach. It is clear that they really do not support BIDs. In fact, on Second Reading, the hon. Member for Brentwood and Ongar (Mr. Pickles) did not have a good thing to say about them.

Some Conservative Members support BIDs, or at least say that they do, but come up with nothing but obstructions and objections, as we have seen in the Committee. That is quite different from probing in order to make something work. I suspect that their opposition is intended to prevent the scheme getting off the ground.

The various obstacles and difficulties should be minimised to make the scheme as clear and simple as possible. My amendments would provide a single simple test. It would be good enough for local council and general elections and would be understood by everyone—the simple ballot.

The purpose of my amendment is to remove the dual key mechanism, to which the hon. Member for Cotswold referred, to allow a decision as to whether a BID scheme proceeds that is dependent solely upon a majority yes or no vote. I shall refer to page 10 of the helpful and widely read draft guidance. The entire Committee finds the principle of setting down draft guidance in Committee extremely helpful, provided one is sent the document, and provided one attempts to read it.

Page 10 reads:

''A successful ballot will have to meet two tests. Firstly, a simple majority of those voting in the ballot must vote in favour. Secondly, those voting in favour must represent a majority by rateable value of the hereditaments (rateable properties) of those voting. This 'dual key' mechanism is intended to ensure that a small number of large businesses cannot force through a measure that small businesses do not support''.

Therefore, it is the end of the matter if there is a no vote. The second test kicks in only if there is a yes vote. The returning officer will have to go through the potentially complicated process of adding up the rateable values of all business ratepayers who have voted. It is then possible that if the total value of those voting no exceeds those voting yes, the scheme will be stopped. That is the only way in which the dual key mechanism would have an impact. It creates the possibility of the losers in a ballot winning after all.

Geoffrey Clifton-Brown (Conservative, Cotswold)

I am sure that the hon. Gentleman did not wish to mislead the Committee, but he omitted the words ''and vice versa'' at the end of the paragraph from which he quoted. Those words are important; otherwise a small number of large businesses could enforce the scheme on a larger number of small businesses.

Patrick Hall (Labour, Bedford)

It could not—[Interruption.] I have read the guidance, possibly more than the hon. Member for

Cotswold has. However, we have already established that that was not his fault because he was not sent a copy. When he did receive one, he lost it. I should like to offer my copy to the hon. Member for Kingston and Surbiton—[Interruption.] Oh, he already has one.

The logic must be followed. A small number of large businesses cannot force through anything because they would fail the first test—they would not win the ballot. Small numbers of anything cannot win ballots because the larger numbers will have voted no. It is only applicable when a small number of businesses have lost and the total of the rateable value exceeds that of the winners.

I have consulted the Bedford Town Centre company on the issue. It is delighted at being one of those selected to be a pilot BID project. I am also delighted at the work that my hon. Friend the Member for Brighton, Pavilion, together with the Association of Town Centre Management, has put into ensuring that the scheme is likely to be a success. There is a great deal of enthusiasm in Bedford in preparing the business plan, which involves all the partners. All 430 business units in the town centre that have been identified will be consulted and urged to contribute. I understand that around 250 of those business units are small businesses. Therefore, the small businesses have the protection of having the numbers if they want to deploy them. The rateable value of those town centre properties, according to the valuation register and the Land Registry in 2002, is approximately £28 million. One property, the BT exchange, is valued at £9 million, which is one third of the total. Were that property to be included in a BID scheme, it would carry a disproportionate weight if its owners were against the BID scheme. That cannot be right, and that is the danger of the dual key mechanism.

I know that the guidance points out that several variations are possible in BID schemes—it is up to the people who draw them up.

Geoffrey Clifton-Brown (Conservative, Cotswold)

How many people does the British Telecom building employ compared with the total number of employees in the other businesses?

Patrick Hall (Labour, Bedford)

I do not have that information, although I am not sure how relevant the point is.

BID schemes can include all sorts of variations and decisions about including or excluding certain sectors or types of trade. Some schemes may include exemptions from the levy or, indeed, apply reduced levels of levy. The greater the opportunity for complication, however, the greater the chance that things will go wrong. I would like my hon. Friend the Minister at least to acknowledge that we must keep things straightforward and simple. The dual key—the rateable value test—is a potential source of complication and is unnecessary. That is the reason for my probing amendments.

I very much support the BID concept, because it has great potential and could yield great benefits for business and town-centre users. Nothing should divert time and energy from work on business plans. The business community should be involved, because its

enthusiasm is essential to making plans work. Schemes will require months to pull all those positive efforts together, and there will be great disappointment and cynicism if they gain a majority of votes, yet fall on the rateable value test. Why risk that?

My hon. Friend the Minister may well say that the Bedford scheme could be drawn in a way that excluded the British Telecom exchange, and maybe it could—there are all sorts of possibilities. However, we should minimise the chances of things becoming complicated and people misunderstanding. We should in no way distort the image of the great benefit that the Bill is making available to our town centres and communities. Let us keep it simple and have one test that everyone understands and respects.

Desmond Swayne (Conservative, New Forest West)

When I put my name to amendment No. 74, my understanding was that it would, for example, ensure that a shop proprietor who owned three shops in the town centre had only one vote, although I expected the aggregate rateable value of all three to count under the second condition. I was, however, concerned that he should be able to vote only once under the first condition. Of course, there was a time when we supported multiple franchises, but those days have rightly ended, and that is the situation that I sought to preserve.

The threshold is an important issue, and I draw the Committee's attention to the Select Committee's recommendations. Paragraph 36 stated:

''The Regulatory Impact Assessment indicates that this will be prescribed as the majority of businesses and more than 50 per cent. of the rateable value.''

The memorandum from the Association of Convenience Stores stated:

''It is vital in setting rules for the arrangements of BIDS, appropriate and effective protection for small businesses is retained.''

As a result, the Select Committee said:

''We recommend that a threshold of two thirds of the number of businesses should be adopted to safeguard the interests of small businesses in a Business Improvement District.''

The Federation of Small Businesses produced a brief, to which the hon. Member for Bedford referred. It calls for a two-thirds majority requirement and a turnout of 75 per cent.

The hon. Gentleman asked why we had not included the three-quarters threshold, and it is because we listened to the legitimate concerns expressed by Labour Members in the debate on the Regional Assemblies (Preparations) Bill. In that debate, on a similar question, we argued for a turnout threshold. Government Members pointed out that that would make it legitimate to oppose the proposal by arguing that people do not vote at all, and that that is unhealthy in a democracy. I think that the force of the argument was with them, and we re-tabled an amendment on the basis of the ''yes'' vote, rather than the threshold. That is the right way to go, and we have gone for that in our amendment. We have proposed a fairly reasonable test in that respect, with regard to the 25 per cent. majority.

We seek to protect the minority interest and to ensure that there is sufficient support to generate a

successful BID, and I shall be interested to hear the Minister's deconstruction of the true meaning of amendment No. 74.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

I shall make two brief comments about the substantive points in the debate. I do not accept the arguments in support of a threshold. The key point is that those who will be asked to pay the BID levy, should a vote go through, should have had a chance to vote. It is vital that the register details all the people who will be eligible and required to pay. I would be concerned if people who were not on that register were sent bills. The register of voters must be the register of people who will have to pay, and there must be a clear link between the two. If that is guaranteed, the only other question that we must be sure about is whether all the people on the register will be properly and duly notified of the ballot, and receive a ballot paper. I understand from the drafting of the legislation and the guidance notes that that will be the case. If the Minister can assure us on those two conditions, there is not a problem, and we should reject the case for thresholds. Local authority elections do not have them, and I do not see why they should be included in the present case. As long as the businesses are notified, I do not foresee the problems that have been suggested.

David Curry (Conservative, Skipton and Ripon)

We have heard a number of analogies between elections to parliamentary or local bodies and elections to BIDs. Those analogies do not have any validity whatever. Local authority and parliamentary elections are to an established body, and take place on the basis of one person one vote, whereas we are talking about elections that are supplementary to an existing process, in which even buildings have a vote, even if their owner does not.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

The right hon. Gentleman may not agree with the analogies, but I disagree with him. The people who vote—the tenants in the main—will be used to voting in elections, will understand the democratic process, and will find it more difficult if a new set of democratic conventions are applied to that ballot.

That draws me on to my next point. The hon. Member for Bedford gave an interesting speech. I am not quite sure whether I shall vote with him if he presses his amendment to a vote.

David Curry (Conservative, Skipton and Ripon)

He will not.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

I think that the right hon. Gentleman is right: the hon. Member for Bedford will probably not ask the Committee to divide. Nevertheless, it is important that the Minister replies clearly to the points that the hon. Gentleman made. I did not table the amendments with him, because for a BID to work there must be a genuine partnership within the given business community. Some larger businesses will tend to occupy the bigger buildings. They are the key to making the partnership work. BIDs are not just about the money that people will be asked to pay; they are about creating dynamics within local business communities to get them to work together for the collective aim. I understand the reason for qualified voting.

My understanding is that the consultation process has been long and extensive, and that businesses are getting what they had asked for—not only representatives of big businesses, but more generally. Businesses see it as fair, given the context. I hope that the Minister will say that that is his understanding of why the qualification for majority voting is required—and I hope that he will convince me not to support his hon. Friend.

Robert Syms (Conservative, Poole)

I spent a number of hours on the Committee that considered the City of London (Ward Elections) Act 2002, which was about a business vote for the City, so I have already dealt with several of the problems. A register will have to be drawn up, and there will have to be a qualifying date. Given that some cities have a high turnover of businesses and individuals, it is sensible to have a ballot close to the qualifying date for registration, otherwise that register will be out of date and the electorate will have changed. What is the qualifying date, and how long after that is the ballot? How long will the ballot be open—a day, a week, a month, a year, or even five years? That is relevant because people take time to make a judgment before voting.

David Lepper (Labour/Co-operative, Brighton, Pavilion)

I wonder whether the hon. Gentleman, unlike some of his hon. Friends, has read page 10 of the draft guidance. It states:

''The ballot will be conducted over a period of a minimum of 20 working days, individual BIDs will be able to decide on the exact time scale.''

Robert Syms (Conservative, Poole)

I thank the hon. Gentleman. If I had been sent the document, I would have known. Many people have said that a majority of one may be legitimate, but for a scheme to succeed it needs the overwhelming support of the community. To make a scheme go, a high threshold will be needed.

How will the ballot take place? Will it be done by ticking a piece of paper, by post, by the internet or by texting? The Electoral Commission suggests numerous methods.

Patrick Hall (Labour, Bedford)

Read the guidance.

Robert Syms (Conservative, Poole)

If I had it, I would. Will there be consultation with the Electoral Commission, to ensure best practice? I am not sure whether it is a secret ballot. Can one see who is voting, and what they have chosen? We have always has secret ballots in Britain, but this is a different sort of election, with a different sort of vote. It would be good if the Minister were to put on record whether it is a secret ballot.

We need answers to a number of questions. The first was about the qualifying day and the register. Are people open to challenge about their registration? We are talking about money, and people may have a view about whether or not someone should vote. Will there be a proper system for that? We need to sketch in a little more detail on how the regulations will operate, so that people will know how the system will work.

Paul Goodman (Conservative, Wycombe)

I have not been sent a copy of the guidance either. Fortunately, I do not need it for the point that I wish to put to the Minister. I shall anticipate the argument that he is likely to make on the

threshold, because he put it to my hon. Friend the Member for Cotswold when talking about the circumstances under which my hon. Friend increased his majority three times. I think that the Under-Secretary's point was that as there is no threshold in general or local authority elections, there is no reason to have a threshold for BID elections, and so amendment No. 100 is mistaken.

However, as my right hon. Friend the Member for Skipton and Ripon (Mr. Curry) said, that really is no analogy. Although general election turnouts have recently fallen and local authority turnouts are often very low, this Parliament and local authorities have legitimacy. Legitimacy does not come about overnight. Even when the turnout in local authority elections is low, it is the legitimacy that local authorities have that allows them to continue to command the assent of the people who live under them for their activities.

I do not see how BIDs can acquire legitimacy overnight, by being literally brought into existence. The Under-Secretary will recognise that under clause 52(2):

''The first condition is that a majority of the persons voting in the ballot have voted in favour of the BID proposals.''

Thus if 100 people are eligible to vote and two vote in favour and one against, the BID will come into existence. The Under-Secretary has argued that that BID will therefore have legitimacy. I do not believe that it could possibly have legitimacy under those circumstances.

Geoffrey Clifton-Brown (Conservative, Cotswold)

My hon. Friend is adducing a very good argument. Does he agree that the converse is equally true? If one or two sensationally bad BIDs fail because they do not have proper democratic legitimacy, that will give the whole concept a bad name and make it likely that there will be fewer BID schemes in the future.

Paul Goodman (Conservative, Wycombe)

Absolutely; my hon. Friend is quite correct.

The Under-Secretary might not like my hon. Friend's threshold of 25 per cent. He may believe that it is excessive, although my hon. Friend the Member for New Forest, West pointed out a few moments ago that we have reduced that threshold in response to concerns expressed by Labour Members. However, the Under-Secretary should include some threshold, or threshold proposal, in the clause, even if it is lower than that in the amendment.

Desmond Swayne (Conservative, New Forest West)

Does my hon. Friend agree with the distinction that I made between a threshold of the number of yes votes and a turnout threshold?

Paul Goodman (Conservative, Wycombe)

Yes, exactly; and as my hon. Friend knows, the foundation on which I have tried to build this contribution is a consideration of turnout. It is impossible to see how a BID election with a low turnout could have the same legitimacy as a local authority election with a low turnout.

David Curry (Conservative, Skipton and Ripon)

I wish to add that, presumably, if a ballot is to be open for a period of days, it will become known during that time how many people have voted. If it appears that the BID is not going to have the

requisite number of voters, there will be plenty of opportunities for its advocates to do some canvassing. If that canvassing still does not generate a reasonable turnout, there must be some presumption about the quality of the BID. There is therefore much sense in having a lower threshold to safeguard against poor-quality BIDs. Surely it is inherent—[Interruption.] It is a long time since I was passed a note in the middle of speaking. I must say that it is very flattering. It creates the same problems as some of the notes that I used to be passed—I cannot read this one either.

The mechanism allows that opportunity. Therefore, the amendment of my hon. Friend the Member for Cotswold is not a nuclear weapon. Because of the nature of the ballot, it is possible to know of any failing. If the advocates cannot get the vote out, they do not deserve to win it. We are arguing about something that need not be a major point of contention.

The word ''legitimacy'' has been used a great deal today. This has been a week for legitimacy. The Minister for Local Government and the Regions and I were in the same Lobby during the vote on another place, and the word ''legitimacy'' was used constantly. Legitimacy is what anybody accepts as legitimacy. Legitimacy is like money. If we agree that the plastic cups in the Room will be used as money, they become money. Whatever we agree is valid. It is divisible. We should not endow the word with too much religious sanctimoniousness, but it helps if people think that the thing is credible and will work. If things can fall on their face and people then squabble and say, ''That didn't get much of a vote; we should have known at the time,'' that will bring the process into disrepute.

I hope that we will look at this intelligently and that the Minister's career does not suffer terribly from his errings on Tuesday—errings in the right direction of course, but with this Government one must be cautious about that. I am not sure what the Under-Secretary did on that occasion.

Win Griffiths (Labour, Bridgend)

Order. I do not think we need to go into that.

David Curry (Conservative, Skipton and Ripon)

No, but I have guarded the Division lists. They are precious, because on occasions I find myself in a Committee that is much less interesting than this, and one is desperately short of literature.

Paul Marsden (Liberal Democrat, Shrewsbury and Atcham)

Many of these points may be valid, although I would not want to get into the monetary value of plastic cups. However, the problem seems to revolve around the fact that some hon. Members have not been sent this mysterious document, which may enlighten them—and me. Perhaps copies could be made available, not simply to the privileged few. The cleaner might have read the document rather than us. Perhaps we can see it too.

Desmond Swayne (Conservative, New Forest West)

I cannot put my hand on my heart and say that I was not sent this document. You will be aware, Mr. Griffiths, that I receive a considerable volume of unsolicited mail, and I do not know whether the document was part of that.

Some of the things that may be in the document need to be put on the record in Committee, because the guidance does not form part of the Bill. Therefore, we may be doing the Minister a service by asking him to answer questions that may be answered in the document, simply to put that on the record.

Paul Marsden (Liberal Democrat, Shrewsbury and Atcham)

Conservative Members may not read their post, but I most certainly do. I did not receive a copy and I look forward to seeing one. If copies could be made available, perhaps the Committee could make sensible progress.

Chris Leslie (Labour, Shipley)

We have had a full debate, and the sense that I take from the Committee is that it would like to make some progress, so I shall be brief as I can be.

I am sure that the hon. Member for Shrewsbury and Atcham (Mr. Marsden) and other hon. Members were sent the BID guidance in their post, but if there was an oversight we will send another copy to hon. Members who have expressed doubt about whether they received it. It is possible that the postal system failed on that occasion. I will give the hon. Gentleman the benefit of the doubt, to save time for the remainder of the Committee.

Mr. Marsden rose—

Chris Leslie (Labour, Shipley)

However, he is insisting, so I shall give way.

Paul Marsden (Liberal Democrat, Shrewsbury and Atcham)

I take exception when a Minister accuses me of receiving a document that I know I have not received. My staff carefully record all documents that come into my office. If I have made a mistake, I stand corrected, but I would like it to be placed on the record that I believe that the Minister is incorrect.

Chris Leslie (Labour, Shipley)

I am interested in the recording system operated by the hon. Gentleman's staff: every single piece of paper received in his office is logged, registered, recorded and no doubt entered in triplicate in a log book. I am sure that he can spend some time later showing it to us.

Win Griffiths (Labour, Bridgend)

Order. We have explored the guidance for long enough. We do not need any more comments about whether hon. Members received it. I am sure that after this sitting everyone will receive a copy. Can we carry on with the debate?

Chris Leslie (Labour, Shipley)

Clause 52 requires that for a ballot to be approved two tests must be met: first, at least a simple majority of those voting must be in favour; secondly, those voting in favour must represent a majority of the rateable value of those voting.

Win Griffiths (Labour, Bridgend)

Order. There is an undercurrent of noise.

Chris Leslie (Labour, Shipley)

We believe that that is fair and equitable. It protects the interests of small businesses, which potentially have the larger number of voters, and large businesses, which potentially have the higher rateable values. The principle behind much of the legislation on BIDs is providing adequate protection to ratepayers, who will be liable for the additional levy within a permissive framework, which will encourage partnership and co-operation without excessive legislation to complicate and inhibit the process.

Amendments Nos. 114, 100, 115 and 117 create two further conditions to be fulfilled: a turnout threshold for eligible voters voting in favour and a turnout threshold for the representative rateable value voting in favour of the proposals. Not only would the first two tests have to be met, but at least 25 per cent. of those entitled to vote would have to vote in favour and at least 25 per cent. of the total rateable value would have to vote in favour. Those conditions would create additional unnecessary complications. The hon. Member for Kingston and Surbiton touched on the simple principle that democracy in this country rests on the right, rather than the obligation, to vote. In that context, we do not usually operate the threshold concept in ballots, whether it is a ballot of ratepayers or electors.

I accept the right hon. Member for Skipton and Ripon's point that it is dangerous to draw direct analogies between parliamentary elections and ballots of ratepayers. The principle of a right, rather than an obligation, to vote counts against the concept of a formal threshold. It may well be that for legitimacy's sake we want to see as high a turnout as possible. Most businesses are not shy in coming forward to vote against a proposition if they have doubts or are in anyway uncertain about elements in a proposed bid. I am sure that the proposed safeguard is sufficient.

The hon. Member for Poole raised a number of particular questions about the technical arrangements for administering the ballot. The local authority will administer the ballot via its returning officer and will be responsible for calculating the result. There will be a 56-day scrutiny period before the ballot commences and a postal ballot of at least 20 working days' duration. Electronic voting might also be possible. Pages 24 to 26 of the guidance go into the issue in detail, and I shall make sure that the guidance is available. The ballot will be secret.

Robert Syms (Conservative, Poole)

Is it clear that there is only one vote on one proposition at any one time? There should not be a ballot on four propositions for one town centre in which people can vote for A, B, C or D.

Chris Leslie (Labour, Shipley)

I am pretty sure that that will be the most likely scenario, although I would not rule out a BID wanting to look at further questions. The guidance will make it clear that simplicity is a virtue.

The hon. Members for Wycombe (Mr. Goodman) and for Cotswold and the right hon. Member for Skipton and Ripon spent a lot of time on the concept of the threshold. A threshold is not part of the usual balloting processes in this country. There will be ample notice and awareness of BID proposals and there is no need for the extra threshold of a specific vote in favour requirement. We have already given a safeguard that both small and large business interests can be properly represented through the double lock mechanism. That overcomes some of the arguments about the interests of small or large businesses being swamped and so forth. With regard to that, the threshold is unnecessary.

The amendments of my hon. Friend the Member for Bedford look in particular to the other end of the scale. He does not suggest that the double lock process is necessary. He would prefer a simple vote of ratepayers. We believe that the dual key mechanism safeguards businesses having the confidence to support a BID. That has been embedded since the publication of the White Paper: the principle protects small and large businesses. The dual key approach has given great reassurance to many involved in the consultation process. The removal of the second condition involving rateable values would be easier to administer but it would not be favourably received by large business interests, which are vital to ensure the success of a BID.

My hon. Friend raised particular points that come from his experiences in Bedford, and in particular those to do with the BT exchange building. He posited the concept that the district's boundaries could be drawn to exclude that sort of property. That might be an option. However, I understand that central list ratepayers—those who are not on the local ratepayers list because they are utilities such as electricity pylons, telephone exchanges and so forth, if they are not offices—will not usually be voters in such circumstances. That might also help to overcome some of his concerns about large inert buildings that go on to a central list of ratepayers. I hope that my remarks to some extent answer the queries that arise from his amendments.

We believe that partnership between all sides of the business world is the key: the double lock mechanism ensures that they are all definitely on board so that the BIDs can progress. I hope that the hon. Member for Cotswold will withdraw his amendment, and that other hon. Members will not press theirs.

Geoffrey Clifton-Brown (Conservative, Cotswold)

I listened to the Minister's reply with great sadness, because it confirmed my prejudice about this Government: they are not true democrats. One day they may come to regret the stance that they are taking because they may find themselves living in an environment where a different party has a large majority and they may want turnouts and thresholds that can help them. Nobody who believes in democracy—it would be surprising if anyone wished to be elected to Parliament who did not—could fail to appreciate the argument that we were trying to put across.

I make it absolutely clear that I am not saying that the threshold that we proposed was right. We may well want to propose a different threshold at a different time. This is an important matter that might be revisited in another place and on Report. Therefore, I will be urging my right hon. and hon. Friends not to press the amendment to a Division on the basis that we may want to bring it back again.

Win Griffiths (Labour, Bridgend)

Is the amendment being withdrawn?

Patrick Hall (Labour, Bedford)

The amendments in my name are probing amendments. However—my hon. Friend the Member for Oldham, East and Saddleworth (Mr. Woolas) should not get upset about this—I am now tempted to press the amendment, but only if we can do so on a

dual key basis; first, a simple headcount and, secondly, the totals of the rateable values of the constituency offices of hon. Members.

Geoffrey Clifton-Brown (Conservative, Cotswold)

That would be too complicated.

Patrick Hall (Labour, Bedford)

I agree.

The hon. Gentleman makes my point about the risks of the dual key.

I have raised legitimate questions about the dual key. It will be tested in practice, and I hope that my concerns will prove unnecessary. History will be the judge. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 52 ordered to stand part of the Bill.

Clause 53 - Power of veto

Geoffrey Clifton-Brown (Conservative, Cotswold)

I beg to move amendment No. 153, in clause 53, page 22, line 8, leave out from 'proposals' to end of line 9.

Win Griffiths (Labour, Bridgend)

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

No. 76, in

clause 53, page 22, line 9, at end insert—

'(2A) In deciding whether to exercise the veto a billing authority must have regard to—

(a) the identification of the classes of owners of superior property interests proposed to be charged,

(b) any classes of owners of superior property interests who are not proposed to be charged,

(c) the allocated proportion proposed to be charged to each owner of a superior property interest, and

(d) the proposed arrangements for the management of the BID including the representation of owners of superior property interests in the management arrangements

and shall exercise the veto unless it is satisfied that the proposed BID arrangements are fair and equitable in relation to the manner in which the projects specified will be financed and shall have regard to any Codes of Practice issued by the Secretary of State.'.

No. 77, in

clause 53, page 22, line 11, after 'such', insert 'additional'.

No. 152,

in clause 53, page 22, line 12, after 'notice', insert—

'no later than 3 months from the date of the ballot'.

Geoffrey Clifton-Brown (Conservative, Cotswold)

Until I looked at the clock just now, I had no idea how quickly time had passed this morning.

David Curry (Conservative, Skipton and Ripon)

How time flies when you are enjoying yourself.

Geoffrey Clifton-Brown (Conservative, Cotswold)

My right hon. Friend takes the words out of my mouth. When I was burning considerable amounts of the midnight oil last night, I did not think that I would enjoy myself this morning, because I envisaged a turgid debate on non-domestic rates. Unfortunately, we shall have that debate this afternoon. At least the evil hour was postponed.

We should try to dispose of BIDs this morning, if we possibly can. I intend to deal with this important group of amendments quickly, but it is necessary to probe the Government's intentions on clause 53, which is a nuclear option.

The primary legislation must stipulate a time limit within which a billing authority must decide whether it will veto a proposal. There should be certainty in that respect. Businesses and local authorities may invest significant time and effort in devising a BID proposal, so the Government must insist on a time limit for implementing a BID proposal. That can be assured only through the establishment of a statutory time frame.

Andrew Turner (Conservative, Isle of Wight)

As the local authority is likely to be closely involved and certainly should be able to discover the content of a BID proposal immediately before it is circulated for a ballot, and as it is impossible to change the proposal after it has been approved by a ballot, would my hon. Friend care to speculate on why the Minister has not permitted the local authority to veto the bid before the expense of a ballot is incurred?

Geoffrey Clifton-Brown (Conservative, Cotswold)

My hon. Friend makes a very good point. That is precisely the purpose of the amendments. If our amendments were to be carried, thus providing democratic legitimacy of the ballot, and more than 25 per cent. were to vote in favour of the proposal, many local people would be very aggrieved if, having gone to all the expense and trouble, the local authority then came along and vetoed the ballot. That is why I want to know under which circumstances the nuclear option will be used. I hope that I have answered my hon. Friend's point.

There are other matters on which I wish to question the Minister. The hon. Member for Kingston and Surbiton said in a contribution some time ago that only ratepayers should be on the list for the ballot—I believe that that is what he said. However, there are many exceptions to that rule. For example, certain public bodies do not pay rates.

Robert Syms (Conservative, Poole)

The Queen.

Geoffrey Clifton-Brown (Conservative, Cotswold)

I am not sure whether the Queen counts as a public body.

Win Griffiths (Labour, Bridgend)

We certainly do not debate the Queen's financial affairs here.

Geoffrey Clifton-Brown (Conservative, Cotswold)

Public bodies such as schools do not pay rates.

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 53 - Power of veto

Derek Conway (Conservative, Old Bexley and Sidcup)

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

Amendment No. 76, in

clause 53, page 22, line 9, at end insert—

'(2A) In deciding whether to exercise the veto a billing authority must have regard to—

(a) the identification of the classes of owners of superior property interests proposed to be charged,

(b) any classes of owners of superior property interests who are not proposed to be charged,

(c) the allocated proportion proposed to be charged to each owner of a superior property interest, and

(d) the proposed arrangements for the management of the BID including the representation of owners of superior property interests in the management arrangements

and shall exercise the veto unless it is satisfied that the proposed BID arrangements are fair and equitable in relation to the manner in which the projects specified will be financed and shall have regard to any Codes of Practice issued by the Secretary of State.'.

Amendment No. 77, in

clause 53, page 22, line 11, after 'such', insert 'additional'.

Amendment No. 152, in

clause 53, page 22, line 12, after 'notice', insert 'no later than 3 months from the date of the ballot'.

Geoffrey Clifton-Brown (Conservative, Cotswold)

On a point of order, Mr. Conway. I have served on many Committees, under the previous and the current Administrations. I understood that it was a convention of the House that, when a Government document was referred to, it would be sent to hon. Members and it would be available on the Table, so that if, by chance, an hon. Member did not have a copy, as was clear from the discussion this morning, one would be available in the Committee Room. I have no criticism of the Ministers, but if that had been the case this morning, it would have avoided much unnecessary discussion and made for a much better debate. We would have conducted our proceedings in a much more orderly way. I seek your guidance on the matter.

Derek Conway (Conservative, Old Bexley and Sidcup)

I hear what the hon. Member says and, indeed, that is good practice. I received the bundle to which he refers in the post, but some members of the Committee may not have done. The method of supplying the papers is not prescribed, but the point that he makes about good practice may be helpful. If the Under-Secretary wishes to comment, that would be useful.

Chris Leslie (Labour, Shipley)

Further to that point of order, Mr. Conway. In the light of the debate that we had earlier, I have asked officials to bring over sufficient copies to be placed on the Table for hon. Members to have to hand throughout the rest of the proceedings. In case there has been a problem in receiving notes on policy intent, I have asked for copies of them, too. I appreciate that we often refer to much documentation in debate, and it is not always possible to have that to hand, but we will certainly try our best to facilitate debate.

Geoffrey Clifton-Brown (Conservative, Cotswold)

As always, the Under-Secretary is courteous. Officials would be completely overwhelmed if they were asked for enough copies for all members of the Committee. Two or three copies will suffice. Having borrowed a copy from the Liberal Democrats this morning, I hereby return it to them. It did not disappear in the bin. I have a spare copy for any other member of the Committee who wants one.

I want to make progress this afternoon and deal with the BIDs fairly rapidly. The purpose of the group of amendments is to prise out of the Government not only the timetable within which the notice of revocation must be served, but the conditions that they must envisage before using the power of veto. Amendment No. 76 identifies a class of property owners who, in the interests of equity, should be considered before a BID arrangement goes forward. As we know, there can be various layers. There can be a licensee, a tenant, a lessee, a head lessee, and a Crown Lessee on top, so it is not a straightforward matter. Having introduced the amendments as briefly as I can, it will be interesting to hear what the Under-Secretary has to say.

Chris Leslie (Labour, Shipley)

I, too, am hopeful that we can make some swift progress, given the amount of business that we have. Sadly, most of the amendments are different in different ways, so I hope that the Committee will bear with me while I explain why I doubt that we can accept them. We have considered several amendments that would make property owners liable to pay the BID levy, and therefore entitled to vote on a BID proposal. We resisted them. There is no practical way in which property owners can be liable for the BID levy. They can, if they wish, make voluntary contributions.

The amendments assume that property owners will pay the levy and therefore we will have a vote on the establishment of the BID. Despite property owners having a vote, the amendments propose that the billing authority should be under a statutory duty to veto a BID proposal if the interests of property owners would be compromised in some rather unspecific way. The only reason for the amendments is that those who want property owners to be liable for the BID levy may also want the entire BIDs to be vetoed, if it were felt that the interests of property owners would not be well served by the BID.

I see no justification for the suggested approach. Clause 53 provides that a local authority can veto a BID proposal, but it does not include, as the amendment would have it, a statutory bias in favour of a particular interest group such as property owners,

and nor should it. The local authority should consider the interests of all those who would be affected by a BID. We are well aware of the interests of property owners and their importance in making a BID proposal work, but they will not be subject to the BID levy.

We expect the local authority veto to be applied rarely to protect the interests of other people in the local area who could be adversely affected by changes made as a result of the creation of a BID. The regulations will be set out in accordance with the policy in the White Paper, which states:

''Councils would have the reserve powers to veto proposals, where they could demonstrate that the proposed BID would conflict with locally adopted plans made under statute, or otherwise formally adopted by the council, such as the community strategy.''

If the council feels that there are conflicting issues, it will have an opportunity for a veto.

Andrew Turner (Conservative, Isle of Wight)

Does the Under-Secretary recall my intervention before lunch? Will he explain why a veto can be exercised only after a ballot is held, not before?

Chris Leslie (Labour, Shipley)

We will come shortly to the timing of the veto and whether amendments Nos. 152 and 153 should be accepted. They would remove the power of the Secretary of State to prescribe the circumstances and to impose a time limit on when the veto may be exercised.

David Curry (Conservative, Skipton and Ripon)

The Under-Secretary himself said earlier that, when the BID proposals were being put together, they would have to involve the local authority as the billing authority. He specifically said that the proposals could be put together only with the local authority. If that is so, how does the Under-Secretary envisage a circumstance in which the local authority would veto a BID proposal in which it had been involved? Does that mean that it is possible to put together a BID proposal and win a ballot on it despite the hostility of the local authority?

Chris Leslie (Labour, Shipley)

I understand that the guidance suggests that it is best practice to have the local authority on board as a natural key stakeholder in any BID arrangement. However, BID proposals can be put together without the local authority being a key player. To allow authorities to have an important role in overseeing some of the issues that naturally affect their functions, activities and concerns, we should give them an opportunity to have a veto in those unforeseen circumstances in which they may not have been a key player at the inception of the BID proposals and a BID vote subsequently takes place. As I have said, those circumstances will be rare.

The powers have been put in place not least to ensure that local authorities have a serious voice and are taken seriously by those putting together BID proposals. That will help to ensure that local authorities are fully taken into account when BID arrangements are drawn up.

Amendments Nos. 152 and 153, as I have said, would remove the Secretary of State's power to prescribe the circumstances and to impose a time

limit on when the veto may be exercised. We see no reason to prescribe a particular period in primary legislation. Clause 53 gives the Secretary of State the power to make regulations regarding the veto. A time limit could be included in regulations, but we see no reason to put one in the Bill. BIDs are a partnership between the local authority and the business community. If a local authority thinks that a BID would conflict with its other plans, it should state that long before a BID ballot takes place. Indeed, we say that in our guidance.

We want to learn from the practical experience of those setting up BIDs before we put specific time periods into regulations. The BIDs provisions are designed to allow maximum flexibility, to allow for different circumstances in different areas, and the amendments would go against the spirit of the legislation.

Geoffrey Clifton-Brown (Conservative, Cotswold)

The Minister has read out his brief very quickly, and I introduced the amendments very quickly. I should be grateful if he could give us some examples of the situation in which a local authority would issue a veto, given that it would have been involved in the process in the first place. Having drawn up a business plan and gone through the whole procedure of the ballot, what are the circumstances in which it would exercise that veto? [Interruption.]

Derek Conway (Conservative, Old Bexley and Sidcup)

Order. Before the Minister replies, perhaps we could find out who would like to answer their phone.

Chris Leslie (Labour, Shipley)

I do not think that it was my phone, Mr. Conway. I always ensure that I switch it off before the proceedings begin—but I will check later on.

David Curry (Conservative, Skipton and Ripon)

It is the Prime Minister thanking the hon. Gentleman for his vote.

Chris Leslie (Labour, Shipley)

It may well be. The right hon. Gentleman has obviously been perusing his reading material in depth.

I can envisage some circumstances in which the veto might be exercised, but it would be unwise to speculate about those. I said that a council might issue a veto if a BID was seen to be in conflict with a local authority's statutory plans, its community strategy or a key plan that had been agreed by the council and that it wanted to pursue. We will shortly be discussing the appeal mechanisms against the veto, and that will help to balance the issue.

I have set out examples of the circumstances in my comments, and on that basis I hope that the amendments will be withdrawn.

Geoffrey Clifton-Brown (Conservative, Cotswold)

The Minister's answer was not wholly convincing. My hon. Friend the Member for Isle of Wight (Mr. Turner) made a valid point. It seems to me that there should be a power for the local authority to exercise a veto before going to all the trouble and expense of a ballot. However, I believe that we have explored the matter as much as we can, and I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 53 ordered to stand part of the Bill.

Clause 54 - Appeal against veto

Desmond Swayne (Conservative, New Forest West)

Will the Under-Secretary enlighten the Committee, for the record, as to what matters are provided for under subsection (2)(d)?

Looking ahead to clause 55(7)(a) and (b), will he also tell us why those paragraphs are placed in clause 55 and not in clause 54? They seem to be more the subject matter of clause 54, which deals with the appeals procedure, than of the commencement arrangements.

Chris Leslie (Labour, Shipley)

The drafting arrangements for provisions on allowing such an appeal and the effect of allowing the appeal placed those provisions under clause 55. However, whether they come under clause 55 or 54 is immaterial to our policy discussion. I have faith, as always, in parliamentary counsel on such matters.

Clause 54 provides that where the billing authority decides to veto a BID, any ratepayer who was entitled to vote in the BID ballot can appeal against the exercise of that veto to the Secretary of State. The clause confers on the Secretary of State the powers to make regulations regarding the timing of appeals, the manner in which an appeal is to be made, the procedure to be followed in connection with an appeal, and the factors to be taken into account when deciding whether an appeal is successful.—[Interruption.] I have a ringing in my ears, Mr. Conway, which suggests that perhaps I am taking too long to explain the clause.

Although it is important that the local authority has the power to veto proposals if it judges that a BID contravenes local arrangements of benefit to the community, it is equally important that businesses that invested time in securing a success in the BID ballot should have a right of appeal to the Secretary of State against the veto.

Robert Syms (Conservative, Poole)

Can a person appeal if they were entitled to vote, even if they did not vote in the ballot, either for or against?

Chris Leslie (Labour, Shipley)

Yes. If they are entitled to vote they will have that right of appeal. As we said in the White Paper when we first made the proposals, the Secretary of State would consider the views of both the council and the rent payers who supported the BID. The council would have to show that in exercising the veto it was acting reasonably and in the interests of the wider local community.

Andrew Turner (Conservative, Isle of Wight)

It is extraordinarily difficult to see how a local authority can act reasonably when it has vetoed a BID post ballot, having failed to exert its influence sufficiently strongly through all the mechanisms that are available effectively to veto that BID pre-ballot. Is it not almost inconceivable that a local authority could be acting reasonably in so doing?

Chris Leslie (Labour, Shipley)

I can certainly concede that it is difficult to envisage circumstances in which an authority would exercise its veto. It is not impossible to imagine circumstances in which a local authority would come into conflict with people proposing a BID, although it is unlikely. There might conceivably be some conflict between the interest that it has a duty to observe for the general people in its vicinity and the interests of the ratepayers as represented by BID proposers, although it is difficult to imagine. There would have to be a burden of proof on the local authority to show that it was acting reasonably in exercising that veto. Appeals could be made to the Secretary of State.

Robert Syms (Conservative, Poole)

Perhaps I can help the Minister. There might be a vote for a BID followed a month or two later by a vote for the council. The political control of the council could well change and so the priorities in a particular area would change. It is also possible to have a BID district across two London boroughs. One of those boroughs might well change its mind as a matter of policy. All those issues might well lead to change.

Chris Leslie (Labour, Shipley)

My understanding is that a veto can take place only up to the point when the BID arrangements come into place and are up and running. It is not possible for the veto to be exercised after that point, so I cannot see that such a circumstance is likely. As I said in response to the right hon. Member for Skipton and Ripon (Mr. Curry), the provisions are mostly to strengthen the local authorities' arm, so that right from its inception they are included by the BID proposers in drawing up something that is likely to have all parts of the local community on board. That is why I believe that we have struck the right balance in this case. We have the safeguard of the appeal system if needs be.

Question put and agreed to.

Clause 54 ordered to stand part of the Bill.

Clause 55 - Commencement of BID arrangements

Andrew Turner (Conservative, Isle of Wight)

It would be out of order if I prolonged the debate on the previous two clauses, but this clause talks about the commencement of the BID arrangements. The Minister has just referred to the local authority only having the power of veto between the ballot on the BID and the commencement of the arrangements. Clearly the local authority's power depends on the extent of the period available between the ballot on the BID and the commencement of the arrangements. I am not sure whether the clause allows a reasonable period for the local authority to consider the matter and for local elections and the conclusion of a consultation on its local strategy to take place before the implementation of the BID arrangements. Does it merely provide for the implementation of such administrative arrangements as are necessary? Indeed, once we start putting those administrative arrangements in place, is that a signal that the BID arrangements have begun to be put in place?

Surely the BID arrangements would be put in place from the moment that the results of the ballot were announced—rather like the arrangements for MPs. It would be difficult for the Minister to identify a period during which the arrangements had not commenced. Perhaps the clause clarifies when the arrangements commence, but from my initial reading I have not found that easy to identify. I am becoming increasingly concerned about why the local authority should require a power of veto after the ballot. If the local authority is so concerned that its community strategy or policies would be inhibited by the BID arrangements, why have those arrangements reached the stage of a ballot? I appreciate that I am not allowed to go over old ground. Will the Minister explain when the BID arrangements commence?

Edward Davey (Liberal Democrat, Kingston and Surbiton)

I rise partly to help the hon. Member for Isle of Wight and also to place on the record that in Kingston we hope to have a BID up and running by this time next year. There may be a ballot in Kingston for a BID in the coming autumn/winter. As I understand it, although the BID proposals in Kingston have not yet been published, according to subsection (3) the day on which the BID proposals come into force has to be set out and arranged as part of the proposals themselves. It is up to local discretion. It is not on the day or the day after the vote has taken place. I hope that that explains the matter to the hon. Gentleman.

Andrew Turner (Conservative, Isle of Wight)

In effect, it means that the local authority would be prevented from exercising its veto, because the BID proposals could include a provision that the arrangements should come into effect the moment the ballot result is announced.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

That is not my understanding of the veto arrangements. Perhaps the hon. Gentleman will intervene to explain why his understanding is different. My understanding from debates within the local business community in Kingston upon Thames is that they will leave a short period after the vote takes place to make the necessary legal arrangements for incorporation and so on, but because they are practical business people they want to push ahead with setting up the business improvement district to derive the benefits from it.

They want to ensure that the benefits they seek to make Kingston a cleaner, safer, well-maintained and better-promoted town centre are achieved as early as possible. I am pleased with the way the Government have phrased clause 55. It leaves discretion for the local BID proponents to decide exactly when the commencement of the BID arrangements suits them in order to deal with the practical issues that they will face. I would not want to see it amended, and I hope that it will be carried.

Chris Leslie (Labour, Shipley)

Under clause 55, when a BID proposal is approved by a ballot, the local billing authority must ensure that the BID arrangements come into force on the day specified in the BID proposals. The hon. Member for Kingston and Surbiton (Mr. Davey) was right to point out that there will be an opportunity for transition between the proposals and the

arrangements. That is the point at which a veto can be exercised.

If a BID is vetoed, the BID arrangements cannot come into force unless the Secretary of State allows an appeal against the veto. In that case, the BID arrangements will come into force on the day determined by the Secretary of State. That day cannot be before the day specified in the BID proposals, and before determining which day it should be, the Secretary of State must consult the billing authority and representatives of the ratepayers. I appreciate the question asked by the hon. Member for Isle of Wight about whether the arrangements could come into force on the day after a ballot. That is an especially interesting point. I have made inquiries, and it appears that it is possible in theory, if unlikely. However, they could and do come into effect on the date specified in the proposals. I will re-examine the guidance, but it suggests that there should be a reasonable period of time between proposals, the date of the result of the ballot and the date when the arrangements come into force to ensure that all parties have sufficient opportunity to consider whether they need to exercise any powers under the provisions.

Question put and agreed to.

Clause 55 ordered to stand part of the Bill.

Clause 56 - Duration of BID arrangements etc

Geoffrey Clifton-Brown (Conservative, Cotswold)

I should like to probe the Minister on subsections (4), (5) and (6). The Minister rejected my practical proposal that some estimate should be given before the BID comes into operation. Given the use of modern computers and the average size of the BID—probably a few hundred people—I suggested that it would be relatively simple and inexpensive to communicate at least an estimate of how much each business was likely to have to pay to give it greater certainty in planning its business.

Do the provisions specified in subsections (4), (5) and (6) relate generally to all BIDs, or are there specific regulations for each BID?

Subsection (4) states:

''The Secretary of State may by regulations make provision . . . as to the alteration of BID arrangements, and . . . as to the termination of BID arrangements.''

I presume that that is the power to terminate them if they start to go wrong financially. That power is then circumscribed by subsection (5), which states:

''The provision which may be made by virtue of subsection (4)(a) or (b) includes provision preventing or restricting the alteration or early termination of BID arrangements.''

Subsection (5) is unnecessary, as the Secretary of State already has the power in subsection (4). If subsection (5) is superfluous, subsection (6) is wholly superfluous. It states:

''Nothing in subsection (5) is to be taken as limiting the power conferred by subsection (4).''

Will the Minister comment on that? The drafting is very clumsy. Subsection (5) could be removed, as

could subsection (6), and nothing would be lost from the Bill.

Robert Syms (Conservative, Poole)

I have a similar point. Under subsection (4), I perfectly understand the Secretary of State having powers of termination, as the scheme would need to be wound up if it got into difficulty before the end of five years.

On alteration of the BID arrangement, a proposal can be made, voted on and implemented, yet the Secretary of State can unilaterally alter the arrangements on which that proposition is based. That might mean increasing the amount of tax that the businesses have to pay. Will the Minister say what he means by alteration in this particular clause? Are we talking about minor technical changes or about major changes that could alter the proposition on which people have voted?

Chris Leslie (Labour, Shipley)

The clause allows BID arrangements to be in place for a period of time specified in the proposals, but not exceeding five years. The BID arrangements may be renewed for further periods, although, each individual period cannot exceed five years. That means that any successful BID can continue to work after the initial period decided in the BID arrangements. A ballot of ratepayers liable for the levy must approve the renewal of the BID arrangements. That ballot will be subject to the same rules as set out earlier. Approval for renewing the BID must be secured to the same dual-key mechanism that was used to secure the first vote. A time limit of five years means that a BID cannot charge ratepayers an additional levy indefinitely; it must be regularly approved by a vote if it is to extend beyond five years.

Desmond Swayne (Conservative, New Forest West)

If the arrangements have been put in place by the means described by the Under-Secretary, including the dual keys, what happens if the Secretary of State makes regulations under subsection (4)(a) and (b) that change the BID arrangements? Will that change the arrangements for BIDs that are already established or is it just a general power that will affect the arrangements for BIDs that come into force subsequently?

Chris Leslie (Labour, Shipley)

That is the question that the hon. Member for Poole (Mr. Syms) asked—whether the alterations would be significant. The clause grants the Secretary of State the power to make regulations regarding the alteration or termination of BID arrangements. We would expect BID arrangements to contain rules on how the business improvement district could be wound up prematurely if the parties to the BID so decided, and the regulations will be general rather than for specific BID proposals.

Again, we want to ensure that safeguards can be put in place, which is the purpose of clause 56 providing the Secretary of State with the ability to make alterations or terminations. They will provide a fall-back to allow a BID to be altered or terminated early if BID members decide to do that in the light of experience but the specific BID arrangements contain insufficient provisions. The regulations could provide a mechanism to deal with such matters as outstanding

contracts or assets that a BID may have when it dissolves.

In setting out the regulations, we will make it clear that we do not envisage the Secretary of State using them to intervene directly in the operation of a business improvement district. Alterations and terminations will take place only in rare and exceptional circumstances, and the presumption will always be the protection of the ratepayers by ensuring that large and unforeseen burdens do not fall on them. It may be helpful for me to circulate an indication of our policy intent on the use of the regulations to give a clearer and more in-depth picture of how we envisage using the regulations, if at all. That may also help enlighten any debate on Report.

Geoffrey Clifton-Brown (Conservative, Cotswold)

The Minister wholly failed to answer the point, which I perhaps put too quickly. I will put it more slowly as he did not take it on board the first time. Why are subsections (5) and (6) necessary?

Chris Leslie (Labour, Shipley)

I took it on board, but I was more concerned with a couple of other points. The clause gives drafting protection to the Secretary of State's ability to make the regulations. I shall be happy to speak again to parliamentary counsel who helped draft the clause, but the subsections make it copper-bottomed and crystal clear that the Secretary of State has the power to make the regulations. I am content with the drafting.

Geoffrey Clifton-Brown (Conservative, Cotswold)

What power does the Secretary of State not have under subsection (4) that is given to him by subsections (5) and (6)?

Chris Leslie (Labour, Shipley)

Those powers set out in subsections (5) and (6).

Question put and agreed to.

Clause 56 ordered to stand part of the Bill.

The rest of the debate is in Hansard.