Business Rate Supplements Bill

Public Bill Committee, 27 January 2009.

Peter Atkinson (Conservative, Hexham)

After our evidence sessions of last week, we now move to more familiar territory.

Mark Field (Conservative, Cities of London and Westminster)

On a point of order, Mr. Atkinson. I appreciate that the nature of the Bill means that there is no formal programme motion debate, and I seek your guidance on how we might address a particular issue. As you are aware, the Bill has had some high-profile attention as a result of news stories in the press. Will I be able to ask the Minister for Local Government whether he has been approached by Members of the other place about the matters before us?

Peter Atkinson (Conservative, Hexham)

Order. I must stop the hon. Gentleman. The Programming Sub-Committee has set a timetable for this Committee. The matter that he raises has absolutely nothing to do with the contents of the Bill.

Mark Field (Conservative, Cities of London and Westminster)

Further to that point of order, Mr. Atkinson. I do not wish to criticise the Chair or answer back, but my point is relevant. The Government—like any Government—are well aware that they can get their business through the Commons without any great difficulty. Therefore, we go through the whole process that we have seen in the Commons. The concern is that in the Lords, where there is no majority—at least as the Lords is currently constituted—amendments can be tabled that have a lot more sway than is, perhaps, the case here. That is the reason why I wish to put the issue on the record.

Peter Atkinson (Conservative, Hexham)

Order. It is clear that nothing in the Bill is relevant to what the hon. Gentleman is saying. As to what happens in another place, that is up to another place, and is equally irrelevant. I appreciate what he is trying to do, but it is not in order.

Clause 1

Dan Rogerson (Liberal Democrat, North Cornwall)

I beg to move amendment 1, in clause 1, page 1, line 7, leave out ‘is’ and insert

‘and the majority of the affected business community are’.

Peter Atkinson (Conservative, Hexham)

With this it will be convenient to discuss the following: amendment 25, in clause 4, page 3, line 21, leave out from beginning to second ‘ballot’ and insert ‘a’.

Amendment 5, in clause 4, page 3, line 21, leave out—

‘where there is to be’.

Amendment 6, in clause 4, page 3, line 21, leave out ‘, the ballot’.

Amendment 7, in clause 4, page 3, line 24, at end insert—

‘(2) Subsection (1)(c) does not apply in relation to Crossrail.’.

Amendment 36, in schedule 1, page 22, line 36, leave out sub-paragraphs (a) and (b) and insert—

‘the arrangements for the ballot’.

Amendment 37, in schedule 1, page 22, line 39, leave out sub-paragraphs (a) and (b) and insert—

‘the result of the ballot’.

Amendment 10, in clause 7, page 4, line 32, leave out from ‘BRS’ to end of line 42.

Amendment 11, in clause 7, page 5, line 8, at end insert—

‘(6) This section does not apply to Crossrail.’.

Amendment 27, in clause 7, page 5, line 8, at end add—

‘(6) This section does not apply to the Crossrail project promoted by the Greater London Authority.’.

Amendment 12, in clause 8, page 5, line 10, leave out—

‘If a ballot on the imposition of a BRS is held,’.

Amendment 28, in clause 10, page 6, line 12, leave out from beginning to second ‘a’ in line 13.

Amendment 29, in clause 10, page 6, line 46, leave out from ‘BRS’ to end of line 13 on page 7.

Dan Rogerson (Liberal Democrat, North Cornwall)

I take this opportunity to formally welcome you to the Chair, Mr. Atkinson, and to thank you for the excellent way in which you conducted our evidence sessions. I am sure that you will agree that they were very useful, as well as informative and helpful to us. That leads us nicely to the matters that we will be discussing this morning and in future sittings.

Amendment 1, which is in my name and that of my hon. Friend the Member for Solihull, goes to the heart of the business community’s concerns about the Bill. As we heard in the evidence sessions, there are grave concerns about the ability of businesses to influence the decision on whether a supplement is enacted in their area. The Minister of State has been keen to point out that the consultation is a key part of the Bill, and that is welcome, but as we heard time and again, there are concerns that that does not go far enough. A ballot would be the ultimate reassurance to the business community that the extra contribution that it is asked to make will be put to what it believes is a good use.

The amendment would include the business community in deciding what is of recognised benefit and interest to an area by making sure that the majority of that community is satisfied that the projects funded by the supplement will promote economic development. As it stands, only the levying authorities need to be satisfied of that. It is important to make it clear in the Bill that, since the supplement will be a key contribution by businesses, they have a role in the consensus on moving forward.

Amendments 5 to 7 refer specifically to ballots, and insert the need for a ballot in all cases. As we went through our evidence sessions, one issue emerged time and again: while the business community had concerns about the timing of the Bill, they were prepared to accept that, where important projects were being taken forward in the local area, business should make its contribution. We heard that this form of property tax was perhaps not ideal and that there were issues regarding owners of property—as opposed to tenants—and how they could make a contribution. The fundamental concern was that the business community should have the right, through a ballot, to sign up to, or reject, any proposal.

When the British Retail Consortium was asked about a ballot, Jane Milne said:

“It is, as far as we are concerned, the single most crucial step as to strengthen the safeguards. There are already safeguards within the Bill, but we do not feel that they go far enough.”——[Official Report, Business Rate Supplements Public Bill Committee, 20 January 2009; c. 19, Q82.]

We also heard from the British Chambers of Commerce. Mr. Frost was asked whether it would be more reassuring to include a ballot. He said:

“Yes, to use that terminology, it is far less scary, because it gives the business community the ability to become involved. The worry with the other programmes that I have mentioned is that they would be seen as an imposition.”——[Official Report, Business Rate Supplement Public Bill Committee, 20 January 2009; c. 24, Q99.]

Dr. Grail, representing British BIDs, expressed concern that where a proposal for a business improvement district was being developed, if there were no ballots on a business rate supplement in the same area, businesses might feel that the only chance they had to prevent being overburdened by additional taxation would be to reject the BID. There were concerns that the lack of a ballot on a business rate supplement might influence how people would vote on a BID in the same area.

From our earlier sessions we heard that many Members, of all parties, felt that the BID process has been constructive and useful, and has achieved a great deal in areas where it has been enacted. Conflict between a BID process and a business rate supplement, if there were to be no ballot for a BRS, could be a crucial issue.

My hon. Friend the Member for Solihull and I were also keen to show through our amendments that we feel that Crossrail is a different case, so it was interesting to hear the evidence from the Confederation of British Industry—it feels that Crossrail is separate, as well. Karen Dee said:

“Businesses will vote for something if they see that it is of benefit to them.”——[Official Report, Business Rate Supplements Public Bill Committee, 20 January 2009; c. 39, Q163.]

We discussed the issue then and the feeling was that Crossrail is different: the process has gone on for a very long time and there has been a great deal of debate; and there has been a Bill through Parliament allowing us to look at the issues very closely. For that reason, we concluded that the provision for a ballot in all cases should not apply to Crossrail.

I am sure that the Minister will want to reply to that and say that we should either have a ballot in all cases or in none, but it is clear to Opposition Members that Crossrail is a unique project. Given its scale, scope and national importance, and the clear expressions of will and involvement by all parties throughout, it should be treated separately. That is why our amendments would provide for a ballot in all cases other than Crossrail, including all new projects.

The key issue is to take the business community forward with us. The Local Government Association felt very strongly that it would be able to do so through debate and consultation with the local business community. I hope that that would be the case in many projects and that a ballot would deliver a yes vote, or would not even be approached, as there was already that consensus and the feeling that everybody was moving forward together. However, there still seems to be a concern in the business community that, without the ability to call for a ballot to focus everybody’s mind and ensure that the process is as constructive and inclusive as possible, the consultation might not prove as effective. So I am certainly very happy to commend the amendment to the Committee. From our point of view, the significant amendments in the group are 5 and 6, which would make a ballot compulsory, no matter what the size of the contribution being made by the BRS to the project.

Mark Field (Conservative, Cities of London and Westminster)

Will the hon. Gentleman indicate who would qualify for such a ballot? I do not wish to do the Government’s arguing for them, but it seems that this is a rather complicated situation. Would the qualification be on the basis of being a leaseholder at a particular time, a freeholder or an owner of property, or of having a particular interest? As he will know, in relation to the existing business vote in the City of London, in my constituency, it is only relatively recently that the qualification has gone beyond simply those in partnership and sole practitioners of businesses to a corporate vote with a complicated structure. How does he envisage the ballot and the qualification for it working?

Dan Rogerson (Liberal Democrat, North Cornwall)

We are not seeking to change the conditions in the Bill about who would qualify for a ballot, and when we come on to talk about thresholds, we will discuss those on whom the rate will be imposed. The issue is that the Bill defines a set of circumstances that would trigger a ballot, which is when a certain percentage—30 per cent. or so—or more of the total scheme budget is to be funded by the BRS. Below that proportion, it will not be necessary to hold a ballot. Given the evidence that we heard and the written submissions that we had from the business community, there is a great deal of concern that the provision does not go far enough and there should be a ballot in all circumstances, and that is what my amendment seeks to introduce.

I will therefore be interested to hear the Minister’s response. I suspect that I can anticipate some of the arguments because we rehearsed them a little during the exchanges—I hesitate to call them debates—in our evidence sessions. I will obviously wait to hear what the Minister has to say, but I hope he will feel that the evidence that we heard in our earlier sittings is convincing enough to move to having a ballot in all circumstances. If I am not entirely satisfied, I may well seek to press some of the amendments to a vote.

Bob Neill (Conservative, Bromley and Chislehurst)

Welcome back to the Chair, Mr. Atkinson. I am delighted to see that it is as sunny in London as it was in the north-east of England when I was there yesterday.

I have much sympathy with the amendment moved by the hon. Member for North Cornwall. In broad terms, my colleagues and I are minded to support it but we have tabled our own amendments. They are grouped here in a different formulation but they would achieve essentially the same objective. I shall speak to those as well as to the hon. Gentleman’s amendment.

The hon. Gentleman is right to say that the amendment concerns two of the Bill’s key issues. Principally, there is the question of whether there should be a compulsory ballot in all cases. My hon. Friends and I adopt the stance that to meet the Government’s objectives of ensuring that the BRS system has credibility in the business community, a ballot is essential in all cases. The threshold that the Government propose—that a ballot should be required only when the BRS will raise more than one third of the total cost of the scheme—seems to us, with respect, a somewhat arbitrary figure. One can think of schemes, particularly some of the joint schemes, that are proposed for transport infrastructure where a quarter or a fifth of the total cost would be a very large sum. In the evidence sessions, Government Members talked about transport schemes for bridges and tramways—that is substantial capital investment—and a quarter or a fifth of the cost would be a very substantial burden to place on businesses.

It may be, if the case is convincingly made, that businesses will consider it a worthwhile investment, and I do not have an objection to that. That is why my hon. Friends and I have always supported the concept of the business improvement district and would be happy to see it implemented further. The key test, however, is that businesses can buy in.

We are particularly concerned in the present economic climate about the potential imposition of large levies without a ballot. We are worried that, without a ballot, there will not be the necessary discipline on local authorities that choose to take up a BRS scheme, although in the current climate how many schemes are likely to be proposed is questionable. Witnesses from the Local Government Association could not think of any bodies apart from the Greater London authority proposing a project. However, as and when the schemes arise, it would be a useful discipline and serve to concentrate minds if local authorities knew from the outset that they would have to take the business community with them and produce something that is acceptable to a majority of them through the double-lock mechanism, which is a sensible safeguard.

I am grateful to the Minister for publishing the consultation guidance, as he promised he would, last Friday afternoon. I do not disagree with the aspirations that it sets out for the early involvement of the business community, but the fact is—I speak as one who has been involved in local government for much of my career—that some local authorities are more proactive and assiduous than others about involving their business communities. A mechanism that requires local authorities to engage with their local businesses, because they need businesses’ votes at a very early stage, would surely be more effective.

Derek Twigg (Labour, Halton)

Can the hon. Gentleman give an example of a local authority that does not consult or involve its business community in any of its decisions? The local authority in Nottingham consulted the local business community, although it ended up disagreeing with it.

Bob Neill (Conservative, Bromley and Chislehurst)

I shall give the Committee a highly publicised example that is now in the process of being overturned. When the previous Mayor of London chose to consult on the western extension of the congestion charge, he went through every statutory hoop and requirement that he was obliged to go through in such a way as to be proof against judicial review. It was clear that the businesses, and indeed residents, did not want the extension to be imposed, but the regime, which is the same as the one that will be in place for BRS, enabled him to ignore the opposition and go ahead. The fact is that, under the current rules, a situation could arise where a local authority—[Interruption.] I think the Minister wants to intervene.

John Healey (Labour, Wentworth)

I am trying to follow the hon. Gentleman’s logic. Given the example that he cites, his logic seems to be moving towards the proposition that there should be a ballot in London, as elsewhere, if there is to be a BRS. That appears to contradict some of the amendments that he will speak to later.

Bob Neill (Conservative, Bromley and Chislehurst)

I am grateful to the Minister for raising that point, but if he follows my argument, he will see that that is not the case. I shall discuss later why Crossrail is a different case. Under the present regime, if a local authority has the political will to impose a scheme, it is not obliged to take the majority of businesses with it. The evidence and the example that I cited demonstrate that that was the case under the previous Mayor of London.

The proposal in the Bill and the existing arrangements give local authorities the opportunity to decide, by a narrow political majority, to implement a scheme, even though it might have been rejected by businesses or there is clear evidence of their opposition. It would be better to test the proposal and get businesses on board. I hope that the hon. Member for Halton is correct in his aspiration that local authorities will not go down a route that will bring them into conflict with local businesses, but localism always carries that risk. Businesses in the present climate need to have some protection against that.

Another point that worries many businesses and is flagged up in the consultation document is that, without the ability to have a ballot, there is a risk of an accumulation of burdens being placed on them. We will come to automatic set-offs for BID levies later, but the BRS and BID schemes, as well as the possibility of community infrastructure and workplace parking levies, could impose a cumulative burden. A real concern in the business community was demonstrated throughout the evidence sessions about that cumulative burden being, for many businesses, the straw that breaks the camel’s back.

For all those reasons, if the Government are genuine about giving local authorities a power to raise revenue that is truly and demonstrably additional, it is important that the local businesses who pay—who may pay substantial sums—are able to have a say on whether they are convinced that there is genuine additionality. If the case is made out and the local authority engages with its business community from the start, it is much more likely to get a result that everyone buys into, which would be to everyone’s advantage.

I hope that the Government will think again about the amendments. I cannot for the life of me see why they would not. The Minister will probably say that he has come to a pragmatic and rational decision that a third of the cost is a reasonable ballpark figure for the threshold. It might be, but he could equally say the same about a quarter or a fifth, because an element of arbitrariness is inevitable in any threshold. Some sort of de minimis exception might be better, and the Minister conceded that we could discuss that. If there is not to be such an exception, there should be a ballot.

On why we do not take that stance on Crossrail, I am perfectly happy to say that Crossrail is and should be an exception, for the perfectly good reason that Crossrail is a project that has been discussed and consulted on within London among business rate payers and voters. London has had an election—a democratic process—in which all the major party candidates standing for Mayor were committed to Crossrail and the funding package for the project. Londoners had a chance to have a say on Crossrail.

Sadiq Khan (Labour, Tooting)

Will the hon. Gentleman remind us how many people with businesses inside London but who live outside London had a say in that decision?

Bob Neill (Conservative, Bromley and Chislehurst)

It is interesting that the Under-Secretary says that, because of a point that struck me during the evidence sessions. Is he hinting that there should be the reintroduction of the business vote in such circumstances? I am sure that his hon. Friends would not like that. My answer to him is that not only was there a democratic election in London, but all the representative business bodies supported the Crossrail funding package. Equally, those same people said, “Although we accept that it works in London for Crossrail, we do not want it imposed elsewhere.”

Mark Field (Conservative, Cities of London and Westminster)

If my hon. Friend will allow me to half-answer the Under-Secretary’s question, of course a significant number of businesses in the City of London, with people who are employees or partners of the business but who live outside, were able to have their say. I accept that it was by no means an entirely satisfactory arrangement, but an important cross-section of the business community had its say—including those in the business community who live outside London. The City of London corporation, as the Under-Secretary and my hon. Friend will be well aware, keenly supports Crossrail, albeit not without making certain criticisms—for example, about the route, which we shall discuss later. None the less, in that rather unsatisfactory way that we have in the context of the corporation, the business vote has had a certain say. In fairness, I should say that the business community is very much in favour of Crossrail, and wants it to be built as soon as possible.

Bob Neill (Conservative, Bromley and Chislehurst)

I am grateful to my hon. Friend for that. I accept his point that, inevitably, unless return to the ‘50s system of a separate business vote, which no party is proposing, that arrangement is imperfect. However, in a large area of London, there was the ability for a great number of Londoners, including a number of business rate payers—not all, of course, because some live outside the boundary—to have a say.

In addition, because of how the Crossrail process has been gone through—by the previous Mayor and the current on, as well as the candidate for the Liberal Democratic party and others—there has been a genuine attempt at dialogue and engagement across the political parties and a broad political consensus within London. That was reflected in support for the project before the scheme was brought forward by the business community—London First, the London branch of the British Chambers of Commerce and the CBI supported a BRS as part of the funding package. They were not saying that it was an ideal measure, but in the case of Crossrail, they said that they were prepared to chip in and that that was a mechanism through which they could move the project forward. That is a pragmatic and sensible enough view, but it does not mean that that approach is appropriate anywhere else in the country.

What amused me in part of the Under-Secretary’s comment is that he seemed to present my hon. Friends and I as people who are denying the rest of the country a great opportunity. I suggest that what we are seeking to do is to save the rest of the country a potentially great burden. The Government are trying, through characteristic sleight of hand, to take the consensus and agreement that a BRS scheme is an appropriate mechanism for Crossrail and use it as a stealth device to increase tax burdens elsewhere in the country, where we know from the LGA there is no demand. There is a demand in London—the Mayor of London submitted evidence saying why that was so, as did London business. There is no such evidence elsewhere.

John Healey (Labour, Wentworth)

Stealth tax? I am struggling with that. It is a common phrase that we hear from the party opposite, but how can the hon. Gentleman describe a business rate supplement as a stealth tax when there has been a public report from Sir Michael Lyons, a White Paper, and parliamentary scrutiny in both Houses of the legislation? If a local authority believed that a business rate supplement was appropriate for its area, there would be lengthy discussion, formal consultation and, in some cases, a ballot. I simply cannot see how this measure merits the description of stealth tax, which surely implies something that people were not aware of, not expecting and were suddenly confronted with. Does the hon. Gentleman not accept that, for the purposes of serious scrutiny, that is simply not helpful or accurate?

Bob Neill (Conservative, Bromley and Chislehurst)

I am surprised that the Minister departs from his normal precision in following my argument. I appreciate that he may have had one or two little distractions over the weekend, but perhaps he could follow my argument carefully. I accused the Government, and I do not resile from the accusation, of using the consensus on the use of the BRS as part of the Crossrail funding mechanism as a stealth device to then impose a tax-raising power elsewhere in the country, where there is not the same level of demand as has been demonstrated in relation to London and Crossrail.

That can be described as a stealth device for this reason: although there has certainly been debate in the broader context of Lyons and the White Paper about the BRS, until the Government published the Bill, there was nothing to suggest that they intended to make the link between the funding of Crossrail, which has had its own separate Act of Parliament, and rolling out the BRS power elsewhere in the country. That was not necessary; the two could have been decoupled. The Government could have introduced a Bill to fund Crossrail and then a separate Bill to consider the broader principle of rolling out BRS elsewhere in the country. That is the stealthiness of which I accuse the Minister.

Nick Raynsford (Labour, Greenwich and Woolwich)

The hon. Gentleman presents his position as defending the rest of the country from the imposition of a burden. I shall give him the benefit of the doubt and assume that he does not see his role as a London MP as imposing an unreasonable burden on London, because that would be the logic of his position. He clearly does not think that, because he thinks that Crossrail will deliver benefits which are such as to outweigh the cost on business of paying the BRS in London. Why does he believe that a similar arrangement should not be possible outside London?

Bob Neill (Conservative, Bromley and Chislehurst)

With respect, the right hon. Gentleman’s logic is flawed. In the case of Crossrail and London, where there is a broad consensus, it is perfectly reasonable to go down a route that was established before the Bill was introduced: there was commitment and sign-up to a BRS part-funding the package for Crossrail. However, the Government then coupled the Crossrail project with rolling out the broader Lyons proposals, which was not necessary.

Why do I say that we are protecting part of the country from a burden? I say it simply because, without a ballot in all cases, there is the prospect of a BRS being imposed on businesses in areas where there is no demand. In London, the consensus had arrived before the Bill appeared. What the Government are doing is using inverse logic—saying that because there is agreement in London without a ballot, we do not need a ballot anywhere else. That is the false logic that is being deployed in the debate, not any argument put by the Opposition.

Mark Field (Conservative, Cities of London and Westminster)

Will my hon. Friend make it clear that if we were discussing the Bill 10 years ago—in other words, before the Crossrail Bill had been considered—we would have been arguing just as forcefully for a ballot on Crossrail? However, we are now a long way down the line in the Crossrail process. The amendments are therefore geared towards involving the business community through a ballot system. As my hon. Friend rightly says, there is a certain level of arbitrariness regarding the threshold—the proportion of the overall spend—before a ballot is held, but we want to involve business as far as we can through a ballot.

Crossrail is a bit of a red herring. I can understand why Government Members are making a lot of it, but the reality is quite straightforward, because we are so far down the line, for want of a better phrase, in relation to Crossrail. Had the Bill been introduced 10 years ago, Crossrail would clearly have been part and parcel of the provisions on ballots that we are now trying to establish.

Bob Neill (Conservative, Bromley and Chislehurst)

I very much agree with my hon. Friend. We have to be realistic as far as Crossrail is concerned. We are where we are, and if we had not adopted the stance that we did in relation to Crossrail, no doubt the Government would have accused us of trying to block or sabotage Crossrail. They cannot do that, because we made it very clear that we are realistic about where we are with Crossrail, and that we want to get on with it. What they cannot do, although they are trying, is to use Crossrail as a shield against criticism of their proposals elsewhere in the country. If they want to deflect criticism or reduce our criticism of their proposals for other areas of the country, they could do so by accepting the amendments that we and the hon. Member for North Cornwall have tabled providing for a ballot in all cases. There would then be an appropriate safeguard for businesses and the criticisms would have far less force. They choose not to do so, so the situation is of their own making.

Neil Turner (Labour, Wigan)

I would like the hon. Gentleman to clarify two points. First, he talks about the consensus within London, but every party was in favour of Crossrail. How can one judge the degree of consensus when the people of London did not have the opportunity to vote against it? All the candidates in the London mayoral elections were in favour of it. Secondly, may I remind him that elections in London are held once every four years, but in the rest of the conurbations of England we have elections every year? These projects will take place over a number of years. It will tend to be large projects that are supported by the supplementary business rate, so there will be the opportunity for consultation over a number of elections. The situation will not be the same as in London, where a project could be introduced after an election and be sorted out before the next one.

Bob Neill (Conservative, Bromley and Chislehurst)

I have great respect for the hon. Gentleman, but he has not been listening to some of the previous arguments. The fact that all the major parties stood on the platform of supporting Crossrail—for exactly the reason that my hon. Friend the Member for Cities of London and Westminster gave, that everyone accepted that we were where we were—demonstrates that there was substantial buy-in among the voters. People could have voted for Respect, and I suspect that the UK Independence party and the British National party were also rather critical of Crossrail, but they did not, for obvious reasons.

We also had evidence from representatives of the London business community that in the circumstances, to kick-start Crossrail, London businesses were satisfied that the mechanism was one that they could live with. The fact that there are annual elections to the unitary authorities elsewhere in the country does not alter the argument. It is perfectly fine and helpful to have elections so that voters—the domestic council tax payers—can have their say on whether to have a council that continues with a BRS scheme. I do not have a problem with that, but that is no reason to say that non-domestic rate payers—those who contribute not through council tax, but through the BRS—should not have a ballot, so that they can have their say. The two are not mutually exclusive in any way.

If the Government conceded the principle that there should always be a ballot for a BRS scheme to be imposed, none of this argument would be necessary. The local authority could go forward, taking the domestic council tax payer vote with it in the elections in the ordinary way, but it would also be able to get buy-in from the business occupiers through a ballot. There would not be the potential conflict that the Government’s scheme gives rise to.

In a rather larger nutshell than I had intended—although I hope I have enabled hon. Members, including Labour Members, to vent their views—those are the reasons why we proposed our amendments and have sympathy with those tabled by the hon. Member for North Cornwall. We certainly wish to see votes on such matters in due course. The other amendments in my name in the group are consequential, relating to the holding of a ballot in every case apart from Crossrail. I hope that that deals comprehensively with this group of amendments.

Brian Binley (Conservative, Northampton South)

It is a pleasure to serve under your chairmanship for the first time, Mr. Atkinson.

I do not want to enter the private grief of Crossrail as regards London’s payment for it, but outside London many people are dubious about the scheme. They fear that it will cost about £25 billion, perhaps more, but do not see it helping them in any way. They feel that that amount of money could be much better used on infrastructure elsewhere.

Having got my bit about Crossrail out of the way, let me explain why a ballot of businesses is vital if we want acceptance of the concept from the business community. I need not tell the Minister about the need to reassure business, because the evidence is plainly in front of him, from almost every business organisation in the country. From my own anecdotal evidence, local business is frightened to death of giving government—particularly local government, which has not proved to be the most efficient instrument in this country for moving our society forward—the ability to raise even more money from the community, particularly the business sector and at a time when Government support for local authorities has been reduced over the years in percentage terms.

Let me tell the Committee why the business community is so concerned. That concern surrounds two major areas. The first concern arises from the appalling episodes and examples of consultation undertaken by local government the length and breadth of the country. We have one at the moment in Northamptonshire, where the portfolio holder responsible for the consultation has herself said that it has not been well organised. In fact, I have not seen one local government consultation that has been well organised.

The thrust of the Government argument seems to suggest that it is okay not to hold a ballot, if less than 33 per cent. of the total cost is to be borne by business, because there will be consultation. I would like the Minister to present evidence of quality consultation in local government. I would like him to tell me how many people with an expert knowledge of the art of consultation are employed by local government. I would like him to show me where consultation has been accepted by the local populace as being effective and meaningful, because in my experience the opposite is true.

Having worked in the business of marketing and public relations for most of my adult life, I look at the consultations emanating from local government in my part of the world with horror—horror at the amateurish nature of the whole process every time. The Minister needs to reassure us as to why he thinks there will be this massive step change in the quality of local government consultation in order to pursue his argument that, in the context of projects involving a contribution of below 33 per cent. from business, such consultation will allay those fears. I assure him that it certainly will not.

Mark Field (Conservative, Cities of London and Westminster)

My hon. Friend makes some interesting points about consultation. Does he not accept that, particularly in relation to quite a few local programmes, all too often there are some deep-rooted interests whose concern, however much consultation they get, is the outcome of a particular inquiry? How would he address the fact that there is always a small minority that can be consulted until the cows come home—in whatever efficient or inefficient way—but that ultimately, if the outcome of the inquiry does not go its way, it feels that it has not had a fair say?

Brian Binley (Conservative, Northampton South)

I thank my hon. Friend for that interjection because it raises an important point. The obvious answer is to bring in professionals. However, to do that throughout the whole nation would be massively expensive. The alternative is to ensure that local government is much more equipped to deal with consultations from its own perspective. It should not see a consultation as simply asking the questions to get the answers that it wants. Furthermore, in a consultation where there has been a sizeable view in opposition to the council’s plans, it should not then override it as being meaningless and ignore it. There is no reason why it should. There is no law that says, “You have to take note of a given consultation.” There is also no sanction where people who do not have a vote are involved in that consultation, and therein lies the serious problem. The whole question of consultation therefore needs to be looked at as a separate issue in local government. However, consultation is not the answer to reassuring local businesses regarding projects where the projected amount that they will need to pay is less than 33 per cent. by the levy of the rate. The second reason why they need reassurance is that very fact in itself.

I wish I could tell the Committee that the projections of a given capital project made by local authorities were worth putting great faith in. The truth of the matter is that, over the length and breadth of the country, assessment of projects by Government, and especially by local government, have been way off target when the total is presented at the end of the project.

I shall cite a situation where a local authority says that the cost to be generated from a local rate of a given project is only 30 per cent. of that rate, so there is no need for the ballot. We then find, after the ballot is taken and the rate is levied, that the cost of VAT contribution turns out to be less, in total, than was projected by the local authority. The business rate contribution therefore becomes 40 per cent. of the total. Do the Government then give that money back? There is nothing in the Bill to say that they should. Again, the situation will simply be created where business feels that it has been conned.

Business sees itself as the milch cow for the Government and has done for some time. Not only are we going to see increasing congestion charges, much of which will be paid by business, but workplace parking levies are being introduced as well. We are seeing charge after charge being levied on business, as though it can continue to provide a massive share of the money spent by Government at all levels.

The Bill will simply open up the fear that, create more suspicion that and add to the thought that the Government’s only concern for business, when it comes down to action rather than words, is that it is a milch cow and is there for local government to grab whatever it can in its interests, and not necessarily in the interests of business. The only way to convince business that it has a proper say in this matter is to give it a proper vote on every project that requires a supplementary business rate.

Peter Atkinson (Conservative, Hexham)

Before I call the Minister, as the clause before us is central to the Bill, if hon. Members want to debate it I suggest that they do so now. I will accept a more wide-ranging debate, rather than wait for a clause stand part debate at the end. That is a warning shot for anybody who has anything else to say, before I call the Minister.

John Healey (Labour, Wentworth)

I welcome you to the Chair, Mr. Atkinson, particularly as we enter the scrutiny period of the Bill. Like other hon. Members, I look forward to serving under your chairmanship and that of your co-Chairman, Mrs. Dean. It is great to see such a strong scrutiny Committee, made up of hon. Members who have long experience in local and national Government, from the north and south of the country, and those with business experience that they can bring to bear on our deliberations. That can only strengthen our scrutiny of the Bill, and I look forward to that.

We are probably all surprised at the level of interest in this Bill in certain sections of the media over the weekend, and look forward to the amendments that may be tabled in the other place when the Bill arrives there.

The amendments that we are debating strike at the core of the Bill, which is the proper relationship between a local authority and the businesses in its area, and the degree to which there is a common, shared interest in the future prosperity and economic development of that area. I think that all hon. Members would accept that, as we heard in evidence from local government and business last week, we are considering the legislation in an era that is different from two decades ago. We must be careful not to base our judgments about this legislation on outdated mindsets, or myths about local government wanting to soak local business for everything it can get. Frankly, we put have put those days well behind us, and I was particularly encouraged to hear confirmation of that from the business organisations that gave evidence last week.

We need to deal with the sort of relationships that are currently in place and, through this Bill, how they need to be strengthened. We are legislating for the potential use of a supplement and a power not just next year or the year after, but—if appropriate and if determined by a local authority with its local businesses—at any time in the future, should there be a strong case for doing so.

Mark Field (Conservative, Cities of London and Westminster)

On that general point, is the Minister personally uneasy at the idea that we lack a democratic safeguard in this regard? He is quite right that local authorities work much more closely with their local businesses in trying to plan for the regeneration of particular parts of the local authority area. However, as we have repeatedly pointed out, there are many business men and women who do not live in the locality. In other words, they have no say on the election of a particular authority. Does the Minister instinctively feel uneasy at the lack of any democratic safeguard, notwithstanding the desire of business and local authorities to work together more closely?

John Healey (Labour, Wentworth)

No, because the democratic safeguard is in the elected local government. The requirement is for elected local government to account for its decisions, and to be subject to scrutiny, public cross-examination and challenge and, ultimately, to being voted out of office for those decisions. That is why the hon. Gentleman will see that, when we get to clause 2, the proposed levying authorities all have that direct democratic mandate. Some have argued that transport authorities ought to have similar powers, but they do not have a direct elected mandate—the democratic safeguard. In the end, we elect our politicians locally and nationally to make decisions that sometimes have to mediate or adjudicate between competing interests, which can sometimes never be reconciled. Ultimately, our job is to stand up and account for our decisions. If people do not like them, there is a strong debate and then, essentially, the opportunity to get rid of us. I am not uneasy in the same way as the hon. Gentleman is, because we framed the Bill to be based in democratic elected local government. That is local government’s proper role, and the proper place to have the ultimate accountability.

The hon. Member for North Cornwall moved amendment 1 and indicated that he might want to press it to a vote. I hope that I can dissuade him from doing so. I shall then come on to the two central issues at the core of our debate and the other amendments: whether there should be a ballot in all cases, and whether London’s Crossrail is an exception.

Amendment 1 is directed at the question of economic development. I hope that the hon. Gentleman will find that the draft guidance, which was published on Friday, underlines what is already in the Bill. It clearly says that a business rate supplement and the funds it raises must be spent on projects that promote economic development. Before we get on to where we disagree, let me attempt to stake out territory that I am confident we agree on.

First, all members of the Committee and all our parties would accept that local authorities have a central and important role in the economic development and prospects of their area. Sir Michael Lyons was strong in his conclusion on that in his recent report. The all-party, Conservative-led Local Government Association is strongly of that view. The sub-national review of economic development and regeneration, which was published in summer 2007, concluded that. Lyons and the sub-national review, on the proposition that local authorities have an important role and require policies and some freedoms in order to play that role effectively, said that they should have the power to raise additional funds to promote economic development. That is precisely what the business rate supplement will allow them to do.

While I am on areas of agreement, I was encouraged by some words of David Frost. I was not surprised, because I know the British Chambers of Commerce and its director-general well. He confirmed that

“in a number of parts of the country...there is a need for more local determination and...the ability to raise additional revenue from the business community”——[Official Report, Business Rate Supplements Public Bill Committee, 20 January 2009; c. 21, Q85.]

The proposition in amendment 1 is to prevent a business rate supplement from being levied unless those businesses that will pay the supplement are satisfied that the project to be funded by the BRS will promote economic development of the area. I agree with that proposition, but I can say to the hon. Member for North Cornwall that it will not come as a surprise to any businesses. As part of the different relationships that are already in place from a couple of decades ago, local authorities already develop and consider their long-term plans for economic and social development, and environmental improvement, through their sustainable community strategy, local strategic partnerships and detailed discussions with business. In almost every area of the country—every one of us could point to significant business people in our own areas who are playing a part—business is involved with those discussions and ultimately, the decisions that local authorities take.

The latest example is the set of local area agreements that the Government agreed with local government last year. In all except one of the 150 local area agreements, local authorities, in wider conversations and with wider support, have picked priorities for themselves that reflect concerns about improving their local economies. For example, six of Cornwall’s 28 local area agreement priorities are economic in nature; three of Bromley’s 30 targets are focused on the economy. The hon. Member for Cities of London and Westminster may be interested to know that his local authority is the only local authority out of the 150 in the country not to make any of its priorities economic. That is a matter for the local authority, and no doubt it has discussed it with local businesses.

Coming back to the BRS, that sort of discussion and consultation will be part and parcel of any consideration that a local authority gives to the potential role for a business rate supplement, even before the formal consultation stage, which we shall come to later in our deliberations. Any proposal will need to explain clearly why it is necessary to consider the project, even before consideration is given to funding it. The Bill and the draft guidance that I have published make it clear that any proposed project plan should set out how the project will improve the economic development of an area. I sympathise with the proposition of the hon. Member for North Cornwall, but in practice the amendment would mean that the local authority would need to demonstrate that the majority of the business community that might be affected by a BRS was satisfied that it would promote economic development before it could go ahead. It is difficult to see how one could satisfy that requirement without a ballot.

In other words, the local authority would be balloting on whether the majority of the businesses thought that the project proposed would contribute to economic development, and not on whether businesses accepted or agreed with the idea that a BRS might play a part. That is clearly absurd. The amendment would lead to serial balloting in the process of a BRS and that is its ultimate flaw. I shall come to the arguments of principle regarding balloting in a moment, but if the hon. Gentleman presses amendment 1 to a vote, that is the logical and practical flaw in his proposal.

Not least because of my local involvements, but also as a Minister, as the Committee would expect, I understand keenly and clearly the concerns that businesses have about the business rate supplement, although they are from time to time rather overstated, which does not necessarily do their case much good.

Brian Binley (Conservative, Northampton South)

I find that remark rather surprising. Is the Minister saying that a robust opposition to a given Government proposal will be less well favoured because of its robustness? Is that what he is telling us? If so, that is a worrying situation.

John Healey (Labour, Wentworth)

No—quite the opposite. The strength of the case and the extent to which it is likely to be carried in the decisions that the Government or this House take rest on how well it is put, not simply on how strongly it is put. It is as true in this field as in any other that organisations sometimes do not best serve their cause by overstating the concerns and anxieties that are at stake. Nevertheless, in framing this Bill we have taken the concerns of business seriously.

One of the safeguards in the Bill, which we will come on to in more detail, is the requirement for any local authority, if the BRS is expected to contribute more than a third of the total proportion of any project cost, to be subject to a ballot. That is despite equally strong arguments from the all-party Conservative-led Local Government Association that there should be no requirement for a ballot, and that any ballot should be a decision for the local authority itself, as appropriate. The all-party Select Committee also takes a view that is different from ours. It does not seek the requirement to have a ballot where a project’s cost amounts to more than a third from BRS.

The evidence sessions bore this out. On the one hand, we had the CBI saying that we should have ballots in every case, whatever the contribution from the BRS. The LGA argued that ballots are unnecessary and should not take place unless the local authority decided it was appropriate. The most interesting, and overall perhaps the most balanced, evidence came from the director general of the BCC. He was clear with us in recognising the constructive relations that generally exist between local authorities, business organisations and the business community now. He also recognised the concerns that businesses have about the prospect of legislation enabling a BRS.

However, the director general ended by confirming to the Committee, in response to questions from my right hon. Friend the Member for Greenwich and Woolwich, that the BCC accepted the third threshold proposed in the Bill. That threshold is designed to recognise that business should not have a blanket veto on any business rate supplement as a contribution to a major project for an area. However, it is also designed that, where a business is likely to do more of the heavy lifting in the financing of a project, it should have that reassurance and extra opportunity to vote on its introduction.

Bob Neill (Conservative, Bromley and Chislehurst)

I understand the logic about the heavy lifting, but will the Minister address the point, raised by my hon. Friend the Member for Northampton, South and other Members, that the assessment of heavy lifting should perhaps not be in terms of the proportion of the expenditure as borne, but also of the quantum? One can envisage some schemes where a quarter will amount to a financial contribution that could fairly be described as heavy lifting.

John Healey (Labour, Wentworth)

We deal with quantum concerns with the Bill’s proposal that there will be a 2p cap on the scale of a business rate supplement. That is an area where we were again urged strongly by all parties in the LGA to go a lot further, and we will come on to debate that.

Nick Raynsford (Labour, Greenwich and Woolwich)

Does my right hon. Friend not think it slightly odd that the hon. Member for Bromley and Chislehurst, who argued that Crossrail should not be subject to a ballot but that every other scheme should be, is now suggesting that the quantum of the contribution should be a factor? There can be no scheme that I can imagine in which there is a greater quantum of contribution from business than Crossrail. Is that not an indication of how hopelessly confused and intellectually bankrupt the Opposition’s case is?

John Healey (Labour, Wentworth)

Quite so. I also think that it exposes the weakness of an approach that says that one specifies quantum figures in legislation because it is difficult to do so in a way that is appropriate for all parts of the country. My right hon. Friend is right. The Bill is framed so that, in the case of Crossrail, the quantum across Greater London would raise about £178 million a year. The quantum of a similar supplement raised across Northamptonshire would be just over £9 million.

Frankly, we in this House cannot legislate on that sort of thing without creating an inflexibility that would be totally dysfunctional. I understand the quantum question being a concern of business, but we are dealing with that by a cap on the size of the levy and by a threshold of a £50,000 rateable value above which businesses would be liable for any business rate supplement—at a stroke taking out the vast majority of businesses in any area.

Brian Binley (Conservative, Northampton South)

What analytical statistical base did the Government use to set its figure of a third as the cut-off point for a ballot? I assume there is an analytical base, and I would love to have it explained.

John Healey (Labour, Wentworth)

It is a matter of studying the impact assessment of any business rate supplement and, in the end, a judgment. We believe that the judgment strikes the right balance, as I described earlier. I shall come to that in a moment, but now I would like to turn to the two principal questions that underpin the different amendments of the Conservatives and the Liberals.

First, both parties’ amendments propose that there should be a ballot in all cases in which the levying authority wishes to introduce a business rate supplement. Second, they propose that the requirement to have a ballot should not apply to London.

Dan Rogerson (Liberal Democrat, North Cornwall)

The Minister is accurately setting out the position of my party and, I believe, of the Conservatives, except in one respect. He just said that the ballot requirement should not apply to London, but that is not what our proposal says; it says that it should not apply to Crossrail. At some point in the future, when Crossrail has been funded and we are all happily taking trains through the heart of London, if other projects emerge, they should be subject to a ballot in the same way. We were specific about saying Crossrail, not London.

John Healey (Labour, Wentworth)

I shall deal with in a moment. To all intents and purposes, for the discussions and the proposition before the Committee and before London—the business rate supplement—the proposal is to levy to the 2p limit. That proposal comes from the Mayor and will fund Crossrail for 24 years. The hon. Gentleman may be taking a very long view and seeking framework legislation for 25 years plus, but the core of the argument is not changed by the technicalities of his slightly deficient amendment.

Our third requirement for a ballot applies across the board—to be clear, it is not limited to any type of project or to any geographical area. The two principal questions raised by the debate are whether the Committee accepts that any contribution—however large or small a proportion of a project—from a business rate supplement should be subject to a vote and, secondly, whether we accept that Crossrail is unique and therefore warrants unique treatment in the legislation. I am disappointed that the hon. Member for Bromley and Chislehurst is still arguing from the Front Bench that London is an exception to the rest of the country—particularly when Crossrail is of national significance, not least with the national taxpayer putting in the largest single contribution to the funding package.

I cannot accept what underpins the hon. Gentleman’s basic argument: that there should be one rule for London and one rule for the rest of the country. In the gentlest terms, that is such a narrow view—one, unfortunately, that we suffered throughout the 1980s and 1990s, when Government economic policy could barely see beyond the limits of Greater London and the south-east, and through which so many of the economic problems and economic potential of the rest of the country were largely ignored. I do not want us to legislate for the BRS in a way that says, “We are interested in London, we will legislate for London and the rest of the country can go hang”. I cannot accept that as a basic proposition for the hon. Gentleman’s amendments.

Mark Field (Conservative, Cities of London and Westminster)

I do not wish to go down the narrow alleyway of a history lesson, but the Minister will be aware that many people in his own party are expressing concerns today at the rescue of the banking system—at the perception that it is a London rescue, with a lot of other industries obviously having great difficulties with the credit crunch.

I go back to the point I made earlier to my hon. Friend the Member for Bromley and Chislehurst. If we were discussing this Bill ten years ago, no doubt Crossrail would be part and parcel of these amendments. In other words, we would not be making any exception for Crossrail. It is simply a fact that Crossrail is so far down the line that it should be given the go-ahead and not necessarily be subject to the ballot safeguards that we regard as important. Looking forward—I go back to what the hon. Member for North Cornwall had to say—we are not trying to make London an exception; we are making the specific Crossrail project an exception.

John Healey (Labour, Wentworth)

For the purposes of this debate and Bill, London and the Crossrail project are the same thing. To divide them is a false basis for argument. I am disappointed that the Liberal Democrats are taking such a London-only view, essentially overlooking the interests of vast swathes of the country, some of which is led by Liberal Democrat local councils.

Let me come to the two principal questions—first, the one of balance.

Bob Neill (Conservative, Bromley and Chislehurst)

With respect to the Minister—because I am sure he does not want to misrepresent what has been said—if he is saying that there is genuine concern for the rest of the country, I accept it. Can he answer why, if we are to pursue an evidence-based approach, there is no evidence from the LGA of anywhere else in the country with a desire to take up the powers proposed for them?

John Healey (Labour, Wentworth)

Surely the hon. Gentleman accepts that any Government ought to be looking to the long term and ought to be capable of legislating and coming up with policy that is not simply in response to the demands placed on them. I hope that in this passage of the Bill we will see a different approach from his party from five years ago, when it raised exactly the same opposition to business improvement districts, through which we set a new framework, allowing local authorities to discuss and develop with local businesses propositions to benefit their areas. It was a visionary move and forward-looking legislation from the Government—and, in particular, from the then Minister who led it through the House, my right hon. Friend the Member for Greenwich and Woolwich—which has proved a great success over recent years. There are 67 business improvement districts in place, many in areas led by Conservative local councils. I encourage the hon. Gentleman to take that longer-term view of the legislation that the Committee is considering this morning.

Brian Binley (Conservative, Northampton South)

Is the Minister not raising the same concern that we are—that the BIDs project was specifically designed to involve business at every stage of the process?

Sadiq Khan (Labour, Tooting)

So why did you oppose it?

Brian Binley (Conservative, Northampton South)

I did not. I was not here. I will speak for myself on this matter, so I do not want any of that nonsense.

Business is involved at every stage of the BIDs process, which has the effect of bringing business into the humble issue of community and its impact on the people whom we serve. That is the opposite of this exercise, which will drive business away because it will not be involved. It will just see the price at the end of the day and know whether it was right or wrong, whether it has been balloted or not, quite frankly. So the Bill is not doing what BIDs did, and that is one of its failures.

John Healey (Labour, Wentworth)

I am grateful to the hon. Gentleman, who gives me the cue to go on to BIDs. He encourages me to use BIDs as a model, and others have cited them as the proper model for a BRS. However, the BRS is unlike BIDs in a number of ways. BIDs have a time limit of five years and their footprint is essentially localised. They are often there to support revenue funding for things such as improvements in local streets and police community support officers—things where the benefit to the businesses involved are direct and immediate. Unlike BIDs, schemes funded by the BRS—Crossrail is the clearest case in point—are likely to be considered appropriate for much wider areas and to offer much wider benefits, beyond the immediate interests of the businesses in that area and, because of the likely time scales, beyond the interests of those businesses that may, if the BRS is introduced, be paying it. So the BRS is different from BIDs, which leads us to our view that the balloting question needs to be dealt with differently.

Let me tie in the question of Crossrail at this point. Like Crossrail, any other potential project that might attract a BRS will almost certainly involve other sources of funding. Local council tax payers, through local authorities, make a contribution; national taxpayers, through central Government, make a contribution; and they are likely to do so precisely because of those wider benefits that such a project could bring across a wider area.

Let me say what for me is the principal question. Where other sources of funding are part of the package for a big project bringing wider benefits, and where there is a will to see investment from other sources so that such projects bring those wider benefits—just like Crossrail—those who argue for a ballot in all cases have to explain whether it is right that businesses should, in all those cases, have a vote and a veto on whether the project goes ahead? In other words, should business be able to block projects even if the will, the desire and the approval is there from people who are not in business but who have an interest in the benefits that a project could bring to an area? Is it right that businesses should have that vote and veto when they may be paying a quarter or a tenth of the project funding, or when a BRS may contribute a negligible proportion of it? That is the question at the heart of whether a ballot is right in all circumstances, and that is why we have taken the view that it is not right to give businesses a vote and a veto in all circumstances, whatever the proportion of funding for a project they would contribute, but that it is right to put a ballot in place where business is required to pay more—more than a third—of the project costs.

I now turn to the question of Crossrail. Is it unique and should it therefore warrant unique treatment in the Bill? In my view, Crossrail is a very special project but it is not unique. It is special in its scale. For the purposes of the BRS, it is also well developed: its business plan, project plan and funding package are clear. To that extent, it is well ahead of the field in relation to the potential use of the BRS. However, I think it is easy for Members of all parties here to consider that other major transport projects similar to Crossrail may be highly desirable, play a big part in economic development and bring benefits to other areas of the country—projects for which the BRS could play a part in the funding package. They may bring a similar relative investment and have similar relative economic importance as Crossrail.

The hon. Member for North Cornwall has argued that Crossrail is special because it has been subject to legislation. Some transport projects in the future, for which the BRS may be appropriate, may also require legislation. If they do, why rule them out of benefiting from a BRS, using that argument to justify a carve-out for Crossrail? The point is that, when Parliament has considered a project and given it the go-ahead—Crossrail in this instance, but potentially other transport projects in other areas—is it right that a business vote could stop the project later? Essentially, that is the argument advanced by the hon. Member for North Cornwall. He is trying to justifying a rather odd position, which, when I gave evidence, I described—perhaps a bit harshly, but I still maintain that this is the case—as illogical and intellectually inconsistent.

Crossrail is special—it is more advanced than any other potential project—but it is not unique in terms of what we, or other areas of the country, may want to use BRS to contribute towards. For that reason, it is not correct to say that it needs a special carve-out, and that we should invent a set of principles to cushion Crossrail and give it special treatment in the Bill.

I hope that the Committee will forgive me for dwelling a rather long time on that point. I shall deal with the points that have been raised and the amendments, but I dwelt on those questions because they go to the core of the Bill, and many other points that we will come on to are in a sense derived from the decisions that the Committee and Parliament will take on them.

We will discuss the provisions for detailed consultation and explore concerns about business consultation and influence on any potential use of the BRS under clauses 5 and 6, but I can say now that levying authorities that want to use the BRS will be required to draw up a prospectus, which will be the basis for formal consultation. The prospectus will need to set out the detailed plans for expenditure, including the time scales and funding sources, in addition to how the supplement will work, the assessment of economic benefits that could be brought to the area and the costs of the project; I have published the draft guidance that will help to frame that requirement to consult. The prospectus will allow businesses to see clearly and cross-examine the costs and benefits that may be proposed. I published the draft guidance at this stage partly for formal consultation over the next 12 weeks and partly to inform the Committee’s deliberations of the relevant clauses when we get to them. In summary, we are trying to strike an appropriate balance.

Brian Binley (Conservative, Northampton South)

Would the Minister be so kind as to give way?

John Healey (Labour, Wentworth)

I am drawing to a close, but I will give way to the hon. Gentleman.

Brian Binley (Conservative, Northampton South)

I am still concerned about local authorities’ ability to consult and the quality of the consultation. Will the Minister give us some reassurance that, as part of the process of ensuring that the Bill works fairly and properly, he will ensure that that quality is improved?

John Healey (Labour, Wentworth)

I am grateful to the hon. Gentleman for his intervention. Indeed, part of my purpose in producing the draft guidance covering consultation is precisely to collect views, particularly from people such as himself who may be concerned about the nature of the consultation process over the next 12 weeks, on whether that could be strengthened, and if so, how. If the hon. Gentleman wants to submit a view to me, I would be pleased to receive it.

In summary, we are trying to strike a balance between giving business a degree of reassurance to which we believe it is entitled, and the interests of others, including local residents, who may benefit from or share an interest with business in a project supported by a BRS going ahead, and who may contribute a share of such a project’s funding. On the question of balloting, those others may therefore say that it is appropriate to give business a vote or a veto if a BRS is to contribute a third or more towards a project’s costs, but not if it makes a smaller contribution and the financial heavy lifting comes from other sources. Business should not be able to block a project’s going ahead on that basis.

I hope that, in the light of the explanations that I have given during our debate, amendment 1 will be withdrawn and the hon. Members for North Cornwall and for Bromley and Chislehurst will not press their other amendments, but will accept that we have striven to strike an appropriate balance in the Bill.

Dan Rogerson (Liberal Democrat, North Cornwall)

I wonder whether I might seek your guidance, Mr. Atkinson, before I remark on the Minister’s point about pressing amendments to a vote. Would it be possible to vote on amendments 1, 5 to 7, 10 and 12 all together? I do not intend to press them to a vote now, but would it be possible to vote on them en bloc, or would there have to be a separate vote on each?

Peter Atkinson (Conservative, Hexham)

No, we cannot do that. We would only vote on amendment 1 at this stage. If hon. Members want to vote on the subsequent amendments, which have been grouped with amendment 1 for the convenience of debate, they will have to be voted on in their proper place in the Bill later.

Dan Rogerson (Liberal Democrat, North Cornwall)

Thank you, Mr. Atkinson. I will signify my intention to press for a vote when we reach the appropriate point. The reason I mention that is that, as the Minister has quite rightly pointed out, amendment 1 relates to the theme under discussion, namely consultation with business and being able to demonstrate that business supports the scheme, but the crucial issue is the ballot, which, as I understand it, is dealt with later in the Bill. We will have the opportunity to vote on, for example, amendments 5 to 7, which are on the issue of a ballot, when we reach them. That is the crucial question for hon. Members, certainly on this side of the Committee.

Peter Atkinson (Conservative, Hexham)

That is correct.

Bob Neill (Conservative, Bromley and Chislehurst)

Along similar lines to the hon. Gentleman, I point out that amendment 25, which is the principal amendment in my name—the others are essentially consequential—is grouped here for the purpose of debate, but it is actually an amendment to clause 4, and I therefore wish to put the Committee on notice that when we reach it, in due course, I anticipate dividing the Committee.

Peter Atkinson (Conservative, Hexham)

I am getting some helpful guidance. If hon. Members indicate that they wish to vote on amendment 25 when that comes, they will not be able to vote on amendment 5, as the one cancels out the other. So voting will be restricted to amendment 25 or amendment 5, but not both.

Bob Neill (Conservative, Bromley and Chislehurst)

But we can have a vote on amendment 1 now, Mr. Atkinson?

Peter Atkinson (Conservative, Hexham)

Yes. I am sorry to have interrupted, Mr. Rogerson.

Dan Rogerson (Liberal Democrat, North Cornwall)

I do appreciate that I threw the debate slightly off course with my question, Mr. Atkinson.

This has been a useful debate on what is the most important issue for many of the witnesses we heard from in our previous sessions. I will focus, first of all, on the points made by the Minister in response to the individual amendments.

Amendment 1 would set out a clear indication that the business community’s views matter, and that for a project to proceed it must be clear that the business community is convinced that the economic development case has been made. Although I accept the Minister’s claim that the only way to do that would be to have a ballot, I would have thought that it might be possible to set out clearly in that ballot that the business community supports the measures in light of the intention to promote the economic development of the area.

The Minister made a number of further points about balloting, and therefore amendments 5 to 7 and 10 to 12, as well as amendment 25, to which the hon. Member for Bromley and Chislehurst has just referred. Why should we not have a ballot for Crossrail? The hon. Member for Cities of London and Westminster made a very good point when he said that if Crossrail were a new project being proposed subsequent to the Bill being considered, of course we would be calling for a ballot. However, Crossrail is different; in the view of many, it is unique. In the Minister’s view, it is not unique; it is very much the same as any other project which might emerge, but I think the time scale makes it very different. Most of the witnesses that we heard from were clear in pointing out that they felt it to be unique as well. I think that most politicians in London would say that Crossrail is a project of unique significance, having had vast amounts of consultation and scrutiny. I therefore believe that it is of a different magnitude, or at least that we have arrived at a formulation different from that for any subsequent scheme elsewhere in the country.

The Minister said that he was sympathetic. I am very grateful for his sympathy and he did look as though he was wrestling with himself and was quite anguished as he tried to reconcile all these important arguments. It might help to point out that, unlike the Conservative party—we will no doubt develop this argument when we debate later clauses—my party does not believe that this measure should be restricted to London. We believe that it is a useful tool, and we heard from the Local Government Association that many projects may now emerge that require a BRS. We do not have a problem with that as a concept. The problem is that there needs to be a ballot. That is our opinion and that of many organisations representing the business community.

The distinction between not having a ballot on Crossrail specifically and not having a ballot in London at all is crucial. The Minister said that 25 years may be the lifetime of this legislation and by then it may well have effectively run its course. A few years ago, it was my privilege to serve on the Committee considering the Bill that became the Commons Act 2006, where we were looking at legislation that dated from the 12th and 13th centuries. It is important that we consider the possibility that future projects in London will be funded under any regulations that we play our part in approving. Most people accept that there is a difference between Crossrail and other projects that may emerge elsewhere in the country.

The Minister returned to a point that he made in his evidence to the Committee— that a ballot will effectively give business a veto over those projects. I think that he is saying that if a third or more of the cost of a project is funded by the BRS, he is quite happy for the business community to have a veto, but if it is slightly less—1 per cent. less for example—he is not happy for it to have a veto. I do not believe that it is a veto, but he has presented it to the Committee in those terms. Government Members who say that there is an intellectual inconsistency ought to consider their own arguments about this concept—or spectre—of a veto quite closely, because surely they apply equally whether the contribution is more than a third or less.

The lower the proportion of the overall financial package provided by a BRS, the less important it is to that project’s advancement. Far from being a veto, the ballot is merely a way for the business community to say to all the other funding partners that it is not convinced that it will reap equal benefit from the economic development in question, so they should go back and look at it again. That important point needs to be borne in mind. Through the consultation, local elections and the mechanisms for contributions that may be made by central Government to a project that is proposed by an elected government body, there is in many cases accountability to these other sections—a veto, if one likes, on behalf of the other funding partners. To pick out the business community and say that it will be handled differently is inconsistent and unfortunate. Regardless of whether the BRS will form more or less than a third of the funding package, the point is that it is still 2p on the rate to a business in an area where a BRS is imposed. It will be of no comfort to the business that the overall contribution is less than a third, because it is still paying its 2p, without the benefit of a vote. The fundamental problem with the Government’s argument is that businesses in an area where a greater contribution is to be made are to be allowed to have their say, even though their own contribution will be no different from that of businesses in an area where the contribution makes up less than a third of the funding package.

There are problems and intellectual inconsistencies in the Government’s argument. I therefore very much wish to press the amendment to a vote, so that we can have the Committee’s decision on that important question. I would also like the opportunity later of a vote on whether a ballot is crucial to the proposal. I believe that it is, and I therefore signal my intention to press to a vote my amendments on the ballot proposal.

Clause 2

Bob Neill (Conservative, Bromley and Chislehurst)

I beg to move amendment 22, in clause 2, page 1, leave out lines 17 to 20.

Peter Atkinson (Conservative, Hexham)

With this it will be convenient to discuss the following: amendment 23, in clause 2, page 2, leave out lines 1 to 5.

Amendment 24, in clause 3, page 2, leave out lines 44 and 45.

Amendment 38, in clause 5, page 3, line 29, leave out subsection (2).

Amendment 39, in clause 5, page 3, line 36, leave out subsection (4).

Amendment 44, in schedule 2, page 23, line 26, leave out sub-paragraph (3).

Amendment 40, in clause 28, page 17, line 42, leave out subsection (3).

Amendment 41, in clause 29, page 18, line 21, leave out paragraph (b).

Amendment 42, in clause 29, page 18, line 44, leave out paragraph (b).

Amendment 43, in clause 30, page 19, line 6, leave out paragraph (b).

Bob Neill (Conservative, Bromley and Chislehurst)

As hon. Members will appreciate, the effect of the amendments is to restrict the scope of the definition of “levying authority” to the Greater London authority. I can be brief because this harks back to our earlier debate, but I was not convinced by the Minister’s reply, for the reasons already stated. We believe that it is possible to decouple Crossrail from the roll-out of BRS elsewhere nationally. Amendments 22 and 23 amend the definition of levying authority in clause 2 and the other amendments are consequential, changing the references to levying authorities elsewhere in the Bill. The arguments have been made; I need not say more.

John Healey (Labour, Wentworth)

Essentially, the amendments would make a business rate supplement an option for London only, removing the possibility for other local authorities in England and Wales to choose to fund a project through a business rate supplement. It is precisely the sort of special treatment that we cannot accept as a Labour Government, and especially as a party that is concerned about the whole country. We are concerned about jobs, investment and the long-term business success of all parts of the country, not only London.

As I have tried to explain to the Committee, we do not accept the arguments made this morning that London is different and should be treated differently in the Bill, or that Crossrail is different. It is the most developed example of a project for which a business rate supplement is appropriate. It is an exemplar, rather than an exception, and from it we can draw good lessons for the way in which a BRS could and should work in other areas.

During our evidence sessions, I was struck by the fact that both business and local government representatives accepted the principle that a BRS should be available across the country, not only in London, despite their concerns about details such as balloting. There is a lot to gain from giving local authorities greater ability to raise investment for local economies, particularly in the way that we require them to do so: in consultation and in partnership with business. The potential would be lost if the amendments were accepted. I hope that the hon. Member for Bromley and Chislehurst will not insist on pressing them, but if he does, I will ask my hon. Friends to resist.

Bob Neill (Conservative, Bromley and Chislehurst)

I have listened to the Minister and he is superficially persuasive. Unfortunately, the Government’s actions belie their reasonable words. He presents the measure as an enabling opportunity for the rest of the country, but there is great suspicion of the Government’s real motives elsewhere in the country. For the reasons rehearsed, there is acceptance that a funding package for Crossrail is in place that people now want to implement. However, juxtaposing this new potential tax-raising power given to local authorities elsewhere and the Government’s slashing the money available for local authorities to support business development gives rise to a real fear that the proposal comes from the Treasury’s desire to transfer burdens from central Government to local businesses.

John Healey (Labour, Wentworth)

Does the hon. Gentleman know by how much central Government funding to local authorities is increasing in 2009-10? He is looking blank, so I shall tell him: 4.2 per cent. Combine that with the fact that it is the second year of a three-year settlement, which has secured certainty for local government, and with the removal of restrictions that were in place on many of the funding streams. The proposal gives local authorities greater freedom to decide their priorities and to fund them.

Bob Neill (Conservative, Bromley and Chislehurst)

It was not a blank look; it was astonishment at the Minister’s chutzpah in trying that one on. In reality, he knows that that 4.2 per cent. relates to the overall funding settlement. He knows perfectly well that that has been roundly criticised by the local authority associations, in particular because it does not reflect the many costs shunted on to local authorities and the additional burdens such as adult social care, or the fact that local authorities are seriously suffering over the outworking of the formula, which he and I have discussed in the past.

John Healey (Labour, Wentworth)

I am interested in the stance that the hon. Gentleman is taking, not least because his party’s leader and shadow Chancellor have already set out national plans for the coming financial year, which would involve a £3.7 billion cut in general Government expenditure. If not an increase of 4.2 per cent., as we propose for next year, what would his settlement be for local government in the next financial year?

Bob Neill (Conservative, Bromley and Chislehurst)

The Minister will not get away with that one either—

Peter Atkinson (Conservative, Hexham)

Order. Nor will the hon. Gentleman. That is out of order.

Bob Neill (Conservative, Bromley and Chislehurst)

My specific response is that the Minister knows full well that that and his earlier comments, which were in order, do not present the whole picture. The funding for the local authority business growth incentives scheme, which is specifically targeted at assisting business and economic development, has been reduced from £1 billion over the past three years to £150 million over the next two years. That is why people are suspicious.

Peter Atkinson (Conservative, Hexham)

Order. May I say to the hon. Gentleman and the Minister that we are not having a debate about that issue, so I would be grateful if we could call it a day?

Bob Neill (Conservative, Bromley and Chislehurst)

You will have gathered from all I have said, Mr. Atkinson, that I am unconvinced by the Minister’s response. I will give way to the hon. Member for North Cornwall because I am sure he will be in order—he always is.

Dan Rogerson (Liberal Democrat, North Cornwall)

I am grateful that the hon. Gentleman thinks so. I want to clarify: is the position of the hon. Gentleman’s party that the provisions of this Bill—that is, to be an extra tool for local government with the business community—even if subject to a ballot, should not be applied anywhere other than on Crossrail in London?

Bob Neill (Conservative, Bromley and Chislehurst)

We do not believe it is timely for rolling out elsewhere in current circumstances but in due course there are other, better means to give business incentives to local authorities. We are not convinced by this mechanism at this time, except for getting Crossrail up and running.

Peter Atkinson (Conservative, Hexham)

Is the hon. Gentleman proposing to withdraw this amendment?

Bob Neill (Conservative, Bromley and Chislehurst)

No. I wish the Committee to vote on it.

Clause 3

Bob Neill (Conservative, Bromley and Chislehurst)

I beg to move amendment 46, in clause 3, page 2, line 10, at end insert ‘, and

(c) which promotes the economic well-being of its area, including the provision of transport infrastructure and the promotion of employment and employment skills, investment, regeneration, business efficiency and competitiveness.’.

Peter Atkinson (Conservative, Hexham)

With this it will be convenient to discuss amendment 2, in clause 3, page 2, line 18, at beginning insert ‘primary and secondary’.

Bob Neill (Conservative, Bromley and Chislehurst)

We now turn to definitions of the use of money raised by BRS. I tabled the amendment in a spirit of genuine enquiry and helpfulness.

One concern raised in the evidence sessions by a number of witnesses from the business community was the definition of economic development. It links to the concerns that are rightly set out in the consultation document that the Minister has provided about how the business community can be reassured that there is genuine additionality in the funding and, if business is to contribute, how it can be assured that the money is genuinely channelled towards economic benefits, rather than substituted for funding for other activities.

The clause starts by referring to

“expenditure...on the project to which the BRS relates”,

but subsection (3) defines what the money can be used for almost by exclusion. It says what BRS money cannot be spent on, but you will remember, Mr. Atkinson, that in the evidence sessions many business organisations said that they would like the Bill to contain a more comprehensive definition of what it could be spent on by way of economic development. The amendment endeavours to achieve that.

If the amendment were made, as well as saying that the BRS money may be spent only on the project to which the BRS relates and that the authority would otherwise not have incurred that expenditure—it is genuinely additional—the clause would state that the BRS money may be spent only in a way that promotes the economic well-being of the local authority’s area. We set out specific examples of such expenditure, which I suspect have been well rehearsed, both in the documentary evidence—the White Paper—and our evidence sessions. I do not think that anyone would argue against such areas of expenditure attracting the interest of authorities for a BRS scheme, but the amendment is intended to reassure businesses that there is a requirement to stick to a definition that is in the Bill, and that should for any reason there be a straying beyond that, they would have recourse through the usual provisions—judicial review and so on.

I am sure that local authorities would not stray, but the amendment is intended to help and to make the spirit of co-operation more effective, which I am sure is something that, after the controversy of the earlier debates, we all genuinely wish to see, having got thus far. That is the spirit in which I move the amendment, and I am interested to hear what the Minister says about how we can achieve that better definition, which seemed to be a genuine—not an obstructive—desire on the part of business.

Nick Raynsford (Labour, Greenwich and Woolwich)

I shall not detain the Committee long, but I cannot fail to observe the extraordinary contortions and intellectual confusion displayed by the Opposition. We have just heard them arguing that the Bill should be limited to London and the Crossrail scheme; however, the amendment, which was obviously tabled at the same time as the others, is based on a widening of the remit to include provision for training, employment and other desirable objectives, which the hon. Member for Bromley and Chislehurst knows perfectly well could not be contemplated for at least 25 years because the proceeds of the business rate supplement have been predicated in London for the support of Crossrail throughout that period.

Bob Neill (Conservative, Bromley and Chislehurst)

The right hon. Gentleman is always courteous, but I am sure that he will appreciate—he has been here long enough—that it is not beyond the wit of anyone to have worked out that had we by some chance and some fluke of arithmetic in the Committee succeeded in limiting the Bill to Crossrail, I might not have moved the amendment. I would have thought that that was obvious.

Nick Raynsford (Labour, Greenwich and Woolwich)

So here we have the Opposition, who have said emphatically that they do not want anywhere else in the country to get the benefit of the provision, saying that although they would like to see the remit expanded to include certain activities such as training and skills development, those things would not be available anywhere else in the country. They would only be available in London where they could not work because the proceeds of the business rate supplement have been predicated for at least 25 years on Crossrail. That is a product of a party the whole approach of which on this subject of relations between business and industry and the promotion of economic development shows no sign whatsoever of an ability to learn any lessons.

The Conservative party wrong-footed itself five years ago when it opposed BIDs. It did not understand the importance of the scheme, to which it is now, at a late date, a convert. It recognises that it made a mistake, but it cannot learn a lesson and it is about to commit the same mistake again. I forecast that in a few years’ time we will hear the Conservatives talking about how excellent it is to have a framework in which business and the local authority can work together for economy development—business rate supplements. I look forward to that day when wisdom prevails, but in the meantime I am appalled at the Opposition’s incoherence.

Dan Rogerson (Liberal Democrat, North Cornwall)

Although I share the concerns of the hon. Member for Bromley and Chislehurst and his hon. Friends about some aspects of the Bill, I agree with the right hon. Member for Greenwich and Woolwich on this issue. As we saw in the last vote, there is a clear difference between the parties’ views on whether the provisions should be available—subject to a ballot, which we have already discussed—outside London. My party believes that the provisions should be available in other parts of the country, as long as there is a clear coming together of the business community, local government and all the other funders to deliver.

I shall speak to the amendments that stand in my name and that of my hon. Friend the Member for Solihull to highlight the thinking behind them. They are probing amendments, to which I hope the Minister will have the opportunity to respond briefly. Amendment 2 deals with education. We question whether there might be provision for training and skills to be involved in a scheme is funded by a BRS, as opposed to specific primary and secondary education, which is funded as a core function of the relevant authority. The purpose of the amendment is to probe the Government and see whether their intention is to allow local authorities, as part of their economic development schemes, to fund in that way the provision of training and skills.

Brian Binley (Conservative, Northampton South)

I was rather taken aback by the remarks of the right hon. Member for Greenwich and Woolwich. It seems to me that there was a sizeable degree of illogical thinking in those remarks. He is the man who presented the BIDs concept to this House and who said that it was vital for business to be as involved as it possibly could be in all the activities relating to the project. He is clearly aware of the need to encourage businesses to be involved, and, I have no doubt, the great scepticism that businesses, particularly small and medium-sized businesses, feel about expenditure that is said to be to their great benefit. They hear those words and become frightened, because all too often in the past they have been told that a particular project or fundraising exercise will be to their benefit, but have found that they are the payers, to very little benefit indeed.

I would have thought that the right hon. Gentleman, who produced the BIDs scheme so well, would have supported the argument that to create confidence within the business community, we need to define the role that a business rate supplement can play and the projects it can be involved with as precisely as we are able. The more open the definition, the more room there is for suspicion in the business community, particularly in small and medium-sized businesses. It is that sector that will be particularly hurt if the burden of a large project lasting 10 or 15 years is placed on it to extract the BRS. I would have thought that he would be pleading with the Minister to expand the definition, on the basis that that would give greater confidence to the business sector.

The business sector made it clear to us that it is immensely concerned about the loopholes in the Bill, which it thinks is loosely written. It is concerned about giving local authorities the right to extract what it sees as greater dues from them. To define that in more sensible terms would be helpful. I urge the Minister to take that plea seriously. If he is unable to tell us today what he might do, he should come back with a better definition, even though he might reject the amendment.

John Healey (Labour, Wentworth)

I am grateful for this short debate. We are dealing with an important part of the Bill, which is drafted to give the sort of assurance that the hon. Member for Northampton, South seeks and, to some extent, the clarification that the hon. Member for North Cornwall is looking for. I suspect that there is no great difference in our general approach to the provisions and to what is right in principle. I accept the intention of the hon. Member for Bromley and Chislehurst in moving the amendment. He is concerned about substitution, as indeed is the hon. Member for Northampton, South.

I shall deal first with amendment 2; in a sense, it touches on the same concern—the risk of substitution. In other words, BRS might be used to fund services for which local authorities should already be providing funding. Were the hon. Gentleman inclined to press the amendment to a Division, I should make it clear that it seems to weaken the safeguards because it narrows the definition set out in clause 3(3)(c) to primary and secondary education rather than broader education services. The effect would be that the business rate supplement would be restricted to primary and secondary schooling.

If hon. Members consider the guidance that was published on Friday, they will realise that local authorities could not propose using BRS revenue to fund housing, social services, education services in general, services for children, health services or planning services. We made that provision for a reason. The Bill is designed to give the reassurance that local authorities cannot use BRS as a supplement to fund services that it has a statutory obligation to provide.

On the question of training and skills, if a proposition was part of a prospectus that demonstrated an investment in training and skills and in promoting the economic development of an area, it could be acceptable for BRS to be an element of such funding. If the hon. Member for North Cornwall was using amendment 2 to seek such an indication, he now has it and will not need to press it to a Division.

Amendment 46 proposes that BRS revenue could be used only to fund expenditure that promotes the “economic well-being” of an area, including

“the provision of transport infrastructure and the promotion of employment and employment skills, investment, regeneration, business efficiency and competitiveness.”

I understand why the hon. Member for Bromley and Chislehurst might want to probe, but the amendment would unnecessarily limit the potential use of BRS.

The Bill already contains clear and appropriate limitations. Clause 1 makes it clear that BRS revenue can be spent only on projects that, the authority has established, contribute to and promote the economic development of an area. As I said, clause 3 prevents sums raised by BRS from contributing to the provision of services that a local authority has a statutory obligation to provide.

The third limitation—or lock, if the Committee wills—is that the Bill makes it clear that BRS funds cannot be used for expenditure that the authority would have incurred if it had not established a BRS. Although limits are appropriate—we have set them out in various parts of the Bill—we do not want to be too prescriptive or restrictive on whether a local authority could use BRS revenues. Provided that the link to economic development can be properly established, it is right that local authorities should have the freedom to propose the type of project for which they wish to use BRS funding.

I hope the Committee will accept that general approach. If members have detailed views on how to frame guidance, I would encourage them to submit those views to the consultation that I launched on Friday.

Bob Neill (Conservative, Bromley and Chislehurst)

I am grateful to the Minister for that response. I hope that he will undertake that the Department will be equally open-minded in its discussion with business over the guidance. If that is a means whereby this can be achieved, then so be it; I am more interested in the objective than the means.

John Healey (Labour, Wentworth)

May I say clearly to the hon. Gentleman and to the Committee that I would welcome it if business organisations that wish to contribute views—either formally, in writing to the consultation, or during the consultation period—were to approach us. I encourage my officials to hold such discussions with business organisations where they have views to contribute on this question.

Bob Neill (Conservative, Bromley and Chislehurst)

I am grateful to the Minister for his helpful response. Against that background, having probed the issue and had a useful debate, I beg to ask leave to withdraw the amendment.

Dan Rogerson (Liberal Democrat, North Cornwall)

I beg to move amendment 3, in clause 3, page 2, line 26, leave out ‘The Greater London Authority’ and insert ‘A levying authority’.

Peter Atkinson (Conservative, Hexham)

With this it will be convenient to discuss amendment 4, in clause 3, page 2, line 27, leave out ‘the Greater London Authority’ and insert ‘a levying authority’.

Dan Rogerson (Liberal Democrat, North Cornwall)

I apologise for the unseemly haste with which I was seeking to debate this issue under the previous group. These amendments look further at what may or may not be done with the money and how it may be used by the organisations that might be involved in spending it. They are probing amendments and are intended to help us understand the Government’s point of view.

As I understand it, provisions under clause 3 allow the GLA, as a levying authority, to permit other bodies to spend some of that money in pursuance of a project, but not in other cases. The Minister referred to passenger transport authorities in other parts of the country, which are not directly elected and therefore are not intended to be levying authorities. However, they may well be involved in the spending of moneys, or the delivery of a scheme. We are seeking to understand how they might be involved, and whether there are provisions in the Bill to allow for that money to be moved. I am sure that the Minister will correct me if I am wrong, but I am assuming that the current provisions are there to allow the GLA, for example, to work with particular boroughs if they are incurring some of the costs of part of the delivery of a project, so that the money could be reimbursed to them. If that is the case, we are trying to find out whether there needs to be flexibility in other parts of the country for other relevant authorities to spend some of that money.

Bob Neill (Conservative, Bromley and Chislehurst)

I have heard what the hon. Gentleman said, but I am not entirely sure what he is driving at. The Minister may be able to help me, but my understanding is that the references to the GLA in this context arise because of the particular nature of the relationship between the GLA and its functional bodies, Transport for London being the most obvious one in this area. However, it is unique and does not relate to any situation elsewhere in the country. Perhaps that is the answer to the hon. Gentleman’s situation, to some degree.

John Healey (Labour, Wentworth)

I am grateful to the hon. Member for Bromley and Chislehurst for trying to assist me. However, despite the amendments and the remarks by the hon. Member for North Cornwall, neither of which are clear, I am not sure what he is seeking an answer to. I would welcome an intervention to clarify that; otherwise, I shall consult the record and try to sort it out.

Dan Rogerson (Liberal Democrat, North Cornwall)

As a London MP, the hon. Member for Bromley and Chislehurst has clarified some of the issues in this provision. I was merely seeking to find out whether the Minister felt that there might be circumstances in other parts of the country where a BRS might be in operation, where similar arrangements would need to be in place to allow money to be moved between organisations. I sense that the Minister is about to find some inspiration on this and I am sure he will reassure me that these amendments will not be necessary.

John Healey (Labour, Wentworth)

I think that my mind is becoming a little clearer. We have framed the legislation to allow other local authorities, singularly or together if they are proposing a BRS, to enter into arrangements for part of the delivery of a particular project that may be supported by a BRS in the same way that we are making provision for the GLA and TfL, which we know will be necessary for the one clearly BRS-related project that is on the stocks—Crossrail. I am confident that we have framed the legislation to cover that possibility were it sensible or required in other areas related to a BRS, but I shall look again at our provisions if the hon. Gentleman thinks we have not.

Dan Rogerson (Liberal Democrat, North Cornwall)

I am grateful to the Minister, and to the hon. Member for Bromley and Chislehurst for clarifying the matter. Hon. Members from at least two parties are keen to see that, with certain safeguards, other areas of the country may be able to explore the option. I wanted to ensure that they have similar provisions in place, allowing them to make best use of it and allowing efficient delivery, as in the provisions set out for London in the case of Crossrail. With that reassurance, and the Minister’s saying that he will look at the provisions again if necessary, I am happy to beg to ask leave to withdraw the amendment.

Clause 4

Clause 5

Dan Rogerson (Liberal Democrat, North Cornwall)

I beg to move amendment 8, in clause 5, page 3, line 35, after ‘office’, insert

‘, and the principal offices of any relevant billing authority,’.

It may seem a minor point, but although we have had discussions about London and particular circumstances that pertain there, certain circumstances pertain to rural potential levying authorities as well, given the great distances involved. The provision in clause 5, as it stands, sensibly says that a prospectus should be available on the internet and copies should be available for inspection at the principal office of the levying authority. That may be a problem in two-tier authorities—it may well be in London—where the levying authority is a body at some distance from people. Those people may be involved in a lengthy, sometimes difficult journey in order to go and inspect the prospectus, if they do not have the ability to look at it on the web or if they would prefer to see a hard copy and ask questions of the relevant officer when they are consulting it.

The point of my amendment 8 is that the principal offices of the relevant billing authority should also be in possession of those documents for people to inspect, so that those living at some distance from county hall, for example, in a large rural county, where there may not be particularly regular or frequent public transport, have the opportunity to consult the documents. The prospectus concerns everybody, so although the business community will naturally want to have a look, council tax payers too, for example, might want to view the prospectus and contribute to the general consultation. It is important, therefore, that people living in the area covered by the levying authority have the maximum opportunity to inspect the prospectus. It seems sensible, therefore, to extend the provision of the relevant documents to the offices of billing authorities as well as to those of the levying authorities.

Bob Neill (Conservative, Bromley and Chislehurst)

The hon. Gentleman raises a fair point.

Brian Binley (Conservative, Northampton South)

I am also concerned about this matter. I have already drawn attention to what I consider to be the weakness in the ability of local authorities to consult properly. Part of that weakness lies not only in the document produced for consultation but in the ability to make people aware of such documents. That affects the entire prospectus issue. Will the Minister consider ways to notify the public of what is going on in the first place, so that they can visit sites where the prospectus might be available? Will he also consider increasing the number of those sites? In rural areas, in particular, finding out about such matters in the first place is a serious problem, not to mention getting to the place where the information can be obtained. In particular, some elderly business people might not be quite up to using the internet in ways that we might expect.

Sadiq Khan (Labour, Tooting)

The hon. Member for North Cornwall introduced his amendment by saying that it was a minor one, but it is not, for three principal reasons: first, because it gives me the opportunity to welcome you, Mr. Atkinson, and to say what a pleasure it is to serve under your chairmanship; secondly, because it allows me to make my maiden voyage in my new role, which it is a pleasure to have; and thirdly because it gives me the chance to introduce a series of clauses that set out in more detail some of the requirements contained in clause 4, which we have not yet had a chance to discuss.

Amendment No. 8 would require hard copies of the prospectus to be made available at the principal offices of the billing authority as well as the authority proposed in the supplement. We are keen to ensure that prospectuses are easily accessible during the consultation, which is why we have required hard copies to be made available at the principal offices of the levying authority and why electronic copies will need to be available on that authority’s website. I accept the need for accessibility, but that need should be balanced with the additional costs that we expect authorities to meet when proposing a supplement. Authorities will not be able to recoup the costs of producing and publishing a prospectus through the BRS—not that anyone is suggesting that they should. We need to show some restraint, therefore, in the requirements that we place on authorities.

Nothing is preventing a good local authority, especially in a rural part of the country, from doing the very sensible things suggested by the hon. Members for North Cornwall and for Northampton, South. The latter made a very good point: we must not all assume that everyone is computer literate and has access to the web. We expect local authorities to take note of their points. They know their areas better than we in Whitehall do. Committee members, whichever side of the Committee they sit, do not want us in Whitehall to impose burdens on local authorities when elected councillors know their communities far better than we do.

We are trying to set out an approach that strikes the right balance to ensure that prospectuses are widely available while keeping costs minimal. Requiring billing authorities to make copies of the prospectus available at the principal offices, which the amendment would do, would increase costs and be prescriptive, but would not necessarily result in a significant improvement in availability. Making copies available in the principal offices of the lower-tier authorities could lead to confusion for ratepayers, who might not realise that the upper-tier authority—the levying authority—is responsible for the project. That is a big concern for the Committee. For that reason, I urge the hon. Gentleman to withdraw his amendment, which is by no means a minor one.

Dan Rogerson (Liberal Democrat, North Cornwall)

I am somewhat mystified by the argument that the Minister is seeking to make. For potentially multi-million pound projects, we are talking about a bit of photocopying and the provision of a prospectus. His right hon. Friend the Minister for Local Government will be well aware that the situation in my local area is about to change. At present we have six district authorities, which would be billing authorities, and Cornwall county council, which as the top tier would be the levying authority if the provisions were enacted. Providing six copies of the relevant information to bring it that much closer in a very rural authority such as Cornwall—I use it as an example because it is the one that I know best—would make a difference.

I accept, of course, that local authorities may choose to provide that information elsewhere, but the business community, local taxpayers and so on are used to the billing authority being the authority with which they interact when paying their bills and having any queries answered.

Sadiq Khan (Labour, Tooting)

Does the hon. Gentleman accept that what we envisage and what his example demonstrates is a conversation between businesses and key stakeholders? His point about rural parts of the country relates to our hope that stakeholders will join the conversation. Some people call that consultation; some call it partnership. During the course of that discussion and consultation, we would expect such points to be made. We expect that good local authorities, such as the one that he is fortunate to have in his constituency, would respect the views of key stakeholders and ensure that copies were available, but does he believe that we in Whitehall should impose that throughout the country?

Dan Rogerson (Liberal Democrat, North Cornwall)

Absolutely, just as I believe that we should impose a ballot, at the risk of being out of order. The provisions are crucial to ensuring that adequate safeguards are in place so that people have the opportunity to interact. The Minister rightly points out that there will be a consultation process, which is to be welcomed. Were I proposing that every business should be sent a copy of the prospectus, I might agree that that would be burdensome to the local authorities involved. However, to say that a copy should be available nearby at the local authority office for consultation is not particularly burdensome.

I did not anticipate pressing the amendment to a vote, because I thought that the Government might graciously give way and accept that it was a beneficial provision that would improve the Bill. However, having heard the Minister’s argument and not being convinced by it, I must press it to a vote.

Schedule 1

Bob Neill (Conservative, Bromley and Chislehurst)

I beg to move amendment 35, in schedule 1, page 22, line 16, at end insert—

‘11A A description of the arrangement by which persons paying the BRS shall be represented upon the governing body of any organisation set up for the purpose of delivering the objectives of the BRS, or if, such organisation is not to be set up, how such persons are to be involved in the oversight of the delivery of those objectives.’.

We come to another measure about which concerns were raised by the witnesses from the business community who gave oral and written evidence. We have sought to strengthen the involvement of business, something that the Ministers have said they desire. I hope that we can broach it in a constructive spirit.

In response to an earlier question, the Minister said he hoped that a dialogue would go on in the drawing up of the BRS schemes. I do not dispute it; I also hope that that is the case, but we think that it needs to go a stage further. As well as dialogue beforehand, there needs to be an ongoing dialogue about the implementation and outworking of the scheme. If businesses are contributing, in varying degrees, it is important that they do not lose control once something is signed off and is up and running. I suspect that it will be in everyone’s interests to have ongoing business involvement.

The Government’s proposals talk in terms of the national project panel in the drawing-up and creation phase. Obviously, it is not practical to have that in the implementation phase, but I hope that it might be possible to ensure that there is business involvement in implementation, as businesses have skills and experience that they could bring to bear to ensure that the BRS is rolled out in the most cost-effective and efficient manner. They would then have a stake in it, and would be able to supplement the skills that local authority and other public bodies have in that regard, thereby making for collaboration.

In some cases, the local authority will propose to deliver the scheme itself, but in others it might be necessary to set up a special purpose vehicle to deliver the scheme, particularly if there is an infrastructure project. Such a vehicle might have a board of directors or some other governing body; its nature could vary according to the legal status of the organisation set up to deliver the purpose, or the SPV. We seek a mechanism whereby business would be represented on and involved in that governing body, or controlling mind, in relation to delivery as well as planning. It seems logical to achieve the sort of partnership and collaboration that I accept Ministers want. That is the background.

We hope that the amendment would be a constructive addition to the Bill. It would not only reinforce business confidence, but bring practical benefits to both business and the broader community, including council tax payers, by ensuring that there was efficient outturn for the project, which will have been given the go-ahead.

Dan Rogerson (Liberal Democrat, North Cornwall)

I am sympathetic to what is set out in the hon. Gentleman’s amendment. We have heard at some length how successful the BIDs model has been, around the country, at delivering extra investment in a very localised area. In addition to the ballot issue, which we have addressed, part of that model concerns the ongoing engagement and involvement of all the funding partners in delivering the scheme, so that they have confidence that it is being delivered in accordance with what was originally set out, and so that any slight variations, or reports on how things are proceeding, are part of engagement in line with previous consultation.

I am sympathetic to the idea that a similar case could be made for having greater involvement in the delivery of a project that a BRS would fund. We have previously debated, or at least discussed, the fact that we do not have the tradition of having a core, uniform business rate for local authorities, but this issue is over and above that. Business is being asked to contribute, and it is important to have some reassurance that business will be heard and that we will get the benefit of business experience. In delivering projects of this kind, it would undoubtedly be beneficial if local businesses that are strongly engaged with economic activity had such opportunities.

Lorely Burt (Liberal Democrat, Solihull)

Does my hon. Friend agree that there is also a concept of natural democratic justice in the proposal, which would involve and use the expertise of local business, thereby gaining commitment? Given that local business is being required to make an economic contribution, surely it should have a say in the running of the project and how it proceeds.

Dan Rogerson (Liberal Democrat, North Cornwall)

My hon. Friend has made her point very well. Her experience of business is no doubt reflected in her contribution.

Dan Rogerson (Liberal Democrat, North Cornwall)

When we adjourned, I was drawing to a close my remarks on the amendment tabled by the hon. Member for Bromley and Chislehurst, regarding some body that would have oversight and ensure that business had a role not just in supporting the business rate supplement and, of course, funding it, but in ensuring that the way in which the project was taken forward had the benefit of business insight and experience.

Although the proposal in the amendment would no doubt need a great deal of refining regarding how such a body should work, who should be represented and so on, it is helpful. I shall thus listen with interest to the rest of the debate before deciding whether to support it.

Philip Dunne (Conservative, Ludlow)

I support the amendment tabled by my hon. Friend the Member for Bromley and Chislehurst, along with myself and other Conservative Committee members.

During the evidence sessions, I was struck by the fact that, at the outset, the Minister indicated that he was keen to listen to representations and willing to take on board those that appeared to make a positive contribution to improve the Bill. It is in that context that I support the amendment.

One of the factors that has led to the success of business improvement districts is the active engagement of those who are taxed in the implementation of the measure for which the tax has been raised locally. One of the major drawbacks of the Bill is that there is no mechanism for the businesses that consent through ballot to be charged in this way to have some involvement in the delivery of the project. It is not just about those businesses being a voice on a decision-making body. They also feel that they can help to ensure that the project will be delivered on time and on budget. That is what businesses do, or seek to do, day in, day out, when managing their activities. That is also what the Government seek to do when introducing measures—particularly large infrastructure projects—although I regret to say that Governments of any hue are not perhaps as successful in achieving the delivery of major infrastructure projects on time and on budget.

It would be interesting if the Minister could, from his ministerial experience, mention any projects of such a scale that have come in on time and on budget without the involvement of significant figures from the business world to help push them through. That is not to cast aspersions on the quality of either the ministerial team or its civil servants, who are responsible for implementation, but the harsh fact is that they are, by definition, less experienced in delivering major projects than the private sector. That is why this matter is important and why I am pleased that my hon. Friend has moved an amendment that would enable consideration to be given to allowing business a voice at the table and, thereby, allowing a role for them in ensuring the delivery of the project. They do not need to take the lead role, but their advice will be available if they have a seat at the table, and one would hope that that would help achieve the objectives of the levying authority that has succeeded in securing the charge.

Now the Minister is in his place, I shall repeat what I said at the beginning. He said graciously in the evidence sessions that he would be willing to listen to representations made from outside bodies as well as Opposition Committee members. I hope that he will take on board the intent behind the amendment. Although it might not be as skilfully drafted as he might wish—I am sure that my hon. Friend the Member for Bromley and Chislehurst would accept revisions or alternatives—we would like to hear the Minister’s response to the intent behind the proposal.

Brian Binley (Conservative, Northampton South)

I support the very important remarks made by my hon. Friend the Member for Ludlow, who has had a distinguished business career and is well versed in the work of business generally. I listened this morning to lots of argument and many claims of intellectualism. I am a practical man, as most business men tend to be, and that practicality is the very essence of the need for business to be involved. We have enough intellectualism to keep us going for many years—much of it sitting in this House. One of the things that we lack in this place is a practical and pragmatic approach to problems and the world of business generally. For the Government to eschew the opportunity for practical business involvement in any project that a local authority may wish to pursue under the Bill seems to be looking a gift horse in the mouth and refusing it.

I have already made the point that previous Government projections, both national and local, for sizeable infrastructure projects have been, in most people’s eyes, deplorable. I do not wish to embarrass the Government—this Government or previous ones, frankly—by going through a list of projections that proved to be so way out on their final total as to be embarrassing. We do not have to get started on the process of the Olympics to any great extent to know that to be the case. Crossrail saw sizeable increases in financial projections, and I do not believe that we are at the end of the game yet. The Government’s performance is decidedly poor in this area, yet there is an opportunity now to involve business, which is considerably more adept at the process. I hope that the Minister will accept the arguments made by business itself to be involved in the process and welcome the proposal with open arms.

This Government have talked a great deal about open government and transparency in government, yet they are now closing down the financial and management aspects of a given project from the very people who will be called on to pay quite a lot of money in support of that project, even though the expertise in the business sector far outweighs the expertise in that respect in government. This Government were specifically concerned about scrutiny in local government. They specifically made the point that there should be wider involvement in scrutiny—involvement greater than that of the elected members themselves—and provided the opportunity for other bodies to be involved in the whole scrutiny process of local government, yet now the Government are closing that down under the Bill. May I remind the Minister that we are talking about the possibility of sizeable private finance initiative projects linked to the tax? We have not explored that in great depth.

Peter Atkinson (Conservative, Hexham)

Order. The Chair has to take a pragmatic view of the hon. Gentleman’s speech and he is getting well out of order. This debate is about the schedule on what goes into a prospectus.

Brian Binley (Conservative, Northampton South)

With respect, Mr. Atkinson, I seek your guidance. I thought that the debate was about amendment 35. I put it to you with all the good manners that I can muster that my remarks are relevant to the amendment. However, I will take your advice and wind up—that is what you are saying to me in a gentle way.

To reiterate, there are those with skills in the business sector who would be willing to become involved in the scrutiny of such a project and to offer their expertise, knowledge and experience. If I am offered cheap expertise at that level of importance, I take it with alacrity, and I hope that the Minister would too.

Sadiq Khan (Labour, Tooting)

I take all offers of cheap advice that I am given, and I take the hon. Gentleman’s contribution with the good grace with which it was given. The hon. Members for Northampton, South, for Ludlow, for Bromley and Chislehurst and for North Cornwall all raised the same point in their contributions on this amendment: we need to take on board the expertise in the business sector. As my right hon. Friend the Minister for Local Government said during previous sittings of this Committee, that is clearly our intention.

The hon. Member for Bromley and Chislehurst spoke about a process of dialogue, partnership and collaboration. That is our intention as well. The amendment, however, would limit local flexibility. I listened carefully to the reasons why it was tabled. My concern, notwithstanding the comments made, is that if we are not careful, we here in Whitehall and Westminster will add further bureaucracy and prescription. That said, we all know that there is a 12-week period of consultation on the draft guidance. We will look at the comments made and, if need be, come back to the measures.

We in the Labour party believe in devolving power to local authorities. We believe that the power to make decisions regarding areas should rest at the spatial level that is best placed to know and understand the facts at hand. My concern is that the amendment would require levying authorities to set out expressly in their prospectus how they will involve stakeholders in the delivery of BRS objectives. That implies that levying authorities should set up a BRS governing board.

The Bill sets out a flexible framework with safeguards within which local authorities should operate to levy a BRS to fund a project aimed at economic development. It already requires levying authorities to set out in their prospectus how they will provide business with information about progress on a BRS-funded project, notwithstanding the fact that we are consulting on the draft guidance and will listen to the comments made by business.

On Second Reading and during the course of this Committee, we have discussed that BRS may be used in many different ways to fund many different projects. Each local authority—rural local authorities and those in urban areas—will have developed in partnership with local business a project and prospectus particular to its needs and long-term vision.

Every area is different and has different needs, different levels of partnership, and different resources at its disposal. It is vital that we provide local authorities with the flexibility to set up and tailor their own governance procedures for projects, just as we expect businesses to innovate rather than allowing central Government to impose a way of governing their businesses. For example, a project might be managed by a few key local businesses or by the services of an outside contractor—I know that that is a particular concern of the hon. Member for Northampton, South, who has mentioned the private finance initiative on a couple of occasions—and each would require a different method of governance.

I accept that clear governance procedures that involve local business should be set out, but the amendment goes further and would limit flexibility. We should not bind the hands of local authorities and businesses in managing their projects.

Bob Neill (Conservative, Bromley and Chislehurst)

I am grateful for the spirit in which the Under-Secretary is responding. There might not be a great deal between us in practice. I understand his concern that we might reduce flexibility, but I ask him to consider that the wording of the amendment, although not necessarily perfect—I am open to suggestions—posits two situations. The first is that a special purpose body or organisation is set up to deliver the BRS. The prescription is that there should be some representation on the governing body, whatever that may be. Secondly, to meet the point made by the Under-Secretary, this can be done through an existing organisation, contractors or whatever. If such an organisation was not set up, a statement would have to be made in the prospectus on how business was to be involved in the delivery. That would not tie hands to such a degree, and I hoped that that might address his point.

Sadiq Khan (Labour, Tooting)

That intervention was really helpful. This is not our last chance to amend the Bill—the House will have other opportunities. I shall speak to officials, having taken those comments on board. I understand the tenor of the hon. Gentleman’s comments and those of his colleagues and the hon. Member for North Cornwall. My right hon. Friend the Minister for Local Government has said the same thing in different words—as someone said, less illuminating. I shall consider the point. For those reasons, I respectfully ask the hon. Member for Bromley and Chislehurst to withdraw the amendment.

Bob Neill (Conservative, Bromley and Chislehurst)

I am grateful to the hon. Gentleman for that response. I hope that we can pursue the matter in the way that he suggests, and I beg to ask leave to withdraw the amendment.

Clause 6

Dan Rogerson (Liberal Democrat, North Cornwall)

I beg to move amendment 9, in clause 6, page 4, line 6, at end insert—

‘(d) any parish council in the affected area.’.

Peter Atkinson (Conservative, Hexham)

With this it will be convenient to discuss amendment 15, in clause 10, page 6, line 11, after ‘persons’, insert

‘as specified in section 6(1)’.

Dan Rogerson (Liberal Democrat, North Cornwall)

Those members of the Committee who were privileged to serve on the Committee that considered Bill that became the Planning Act 2008—several are here today—may recall that I moved a similar amendment to that legislation. Parish councils should be explicitly mentioned in the Bill as consultees at crucial times.

It would be generally good practice to send out the signal that parish councils play a most important role in many parts of the country. Like the Minister, I have met representatives of the National Association of Local Councils, whose members are keen to have the opportunity to contribute to all such debates, and their views should be remembered. All levying and billing authorities have regular contact with their parish councils—at least, the good ones do—and there will be strong communication between them. It would send out the wrong signal were we to miss out the parish councils when considering such matters. We should give them the opportunity to comment on important prospectuses of the sort provided under the Bill.

As always, local government is changing. The hon. Member for Ludlow is no longer in his place, but his local authority of Shropshire, like mine, Wiltshire and Northumberland, is going through the process of becoming a unitary authority. Part of Cornwall’s bid was that the parish council’s role should be enhanced; as the district council tier disappeared, it was acknowledged that parish councils, especially the larger ones, would be important in ensuring that decisions were taken locally—a consideration that was agreed to.

As a Member with a constituency that includes 70 parish councils, I can say that their meetings play an important part in all decision making. The district councils, North Cornwall district council, Restormel borough council and Cornwall county council have a good record of co-operation. However, that is not necessarily a given. When such important decisions are being taken, it is necessary to underline the fact that local councils should have the opportunity to be involved.

Bob Neill (Conservative, Bromley and Chislehurst)

I am impressed by the points made by the hon. Member for North Cornwall. Bromley does not have parish councils. I had the pleasure of serving on the Committee that considered the Local Government and Public Involvement in Health Act 2007, where I had some lengthy debates with the Minister about whether at some point in our history there might have been a parish council in Pratts Bottom. Thanks to that legislation there is one now. Pratts Bottom is adjacent to the Kent parish of Badgers Mount.

There is now a power to set up parish councils in London, so the right hon. Member for Greenwich and Woolwich and I might find that we have parish councils at some point and that they wish to be involved in the activities that flow from the Bill. Last weekend I happened to be in Wiltshire and had the chance to meet members of and candidates for the new unitary authority, along with some of its officers—the transition team. It is clear, and I take the point, that whatever one’s views, such bodies are a fait accompli in some parts of the world. There is clearly the scope and the desire across the political spectrum to give parishes and local councils an enhanced role in those structures, as you will know, Mr. Atkinson, from your experience in Northumberland, so it is timely to recognise their legitimate role. Hexham is an example of a town council that is probably involved with businesses in its area, so it has a legitimate locus in these matters. I hope that the Ministers will look favourably on an amendment that does not create onerous burdens, but opens up opportunities for those bodies in the current circumstances.

Sadiq Khan (Labour, Tooting)

The amendments would change the requirements on levying authorities to consult before introducing a BRS. The amendment moved by the hon. Member for North Cornwall would require authorities to consult parish councils. Before I deal with his argument, let me put his amendment in the context of the Bill.

The Bill requires local authorities in two-tier areas to consult their lower-tier authorities. Those are the district councils or, in London, the boroughs and the common council. In part, that is because those authorities will act as the billing authority for the supplement, alongside their existing role of collecting business rates more generally. The two tiers of government will also need to work together to ensure that the proposed project is consistent with other initiatives in the area.

As set out in the draft guidance for consultation published on 23 January, levying authorities will need to consider how their BRS fits with the sustainable communities strategy and the priorities set out in the local area agreement. As such, levying authorities will need to consider how the proposed project fits with the existing plans for the area. Clause 6(1) provides that levying authorities will need to consider consulting those who might be affected by the proposed project, over and above those who will be liable for the supplement and the lower-tier authorities in a two-tier area. That could include parish councils, as a levying authority will want to ensure that a proposed project is consistent with other plans for the local area. However, depending on the project, that might not always be appropriate and it should therefore be left to the discretion of the local authority, rather than being mandatory.

Amendment 15 would define “relevant persons” for the purposes of consultation on a proposal to vary a BRS under clause 10. Clause 10(5) makes it clear that when an authority consults on a proposal to vary a BRS, it should consult those who are liable for the supplement and those who will become liable should the variation go ahead. That is an important protection for taxpayers as it ensures that all those who will be liable for a BRS, either from the outset or because of a variation in an existing project, will have the opportunity to have their say. If the amendment were accepted, that protection would be lost, and I therefore ask the hon. Gentleman to withdraw his amendment.

Dan Rogerson (Liberal Democrat, North Cornwall)

I am not having much luck convincing Ministers that relatively small changes, such as the provision for prospectuses which we debated under clause 5, are safe enough to include in the Bill. There seems to be a concern that they are radical changes that might blow things apart. They are not necessarily radical changes, but they are quite important in signalling the intention that these consultations, discussions and debates should be open and inclusive, to allow important organisations such as parish councils to contribute. I am somewhat disappointed that the Minister has again chosen not to accept the amendment. I would welcome any reassurance that, in the guidance and information coming out with the Bill, a reference will be made to local councils.

Sadiq Khan (Labour, Tooting)

I think I can give the hon. Gentleman the reassurance he seeks. All our consultations are genuine, but this one is even more so than normal—it is genuine squared. I understand that rural parts of the country have different needs to urban parts and that is one of the reasons for the flexibility. I take on board his concerns and we will see what the consultation over the next 12 weeks delivers.

Dan Rogerson (Liberal Democrat, North Cornwall)

I am grateful to the hon. Gentleman. The Government have clearly acknowledged that local councils play an important part in many areas of the country. Our debate the amendment underlines our recognition of that fact. I will not press the amendment to a vote, as to do so would delay the Committee to no great purpose. However, it is important that we have the debate and that local councils know that we are aware of their existence and the important role they play. I beg to ask leave to withdraw the amendment.

Bob Neill (Conservative, Bromley and Chislehurst)

I beg to move amendment 26, in clause 6, page 4, line 21, leave out ‘think’ and insert ‘consider’.

Peter Atkinson (Conservative, Hexham)

With this it will be convenient to discuss the following: amendment 19, in clause 24, page 15, line 8, leave out ‘thinks’ and insert ‘can demonstrate’.

Amendment 34, in clause 24, page 15, line 8, leave out ‘thinks’ and insert ‘considers’.

Bob Neill (Conservative, Bromley and Chislehurst)

Amendments 26 and 34 will, I hope, not be regarded as the product of a mind too long exposed to legal textbooks. They were tabled to probe the Government’s intentions. It strikes me that, in this context, the use of “think” might jar, so the amendment replaces it with “considers”. The relevant part of the subsection states:

“For the purpose of subsection (1)(c), a levying authority must, in particular, think whether it would be appropriate to consult persons who the authority thinks might become liable to pay a chargeable amount”.

Leaving aside the fact that if we were playing “Just a Minute” we would lose a point for having two “thinks” in the same sentence, the wording implies that the authority must go through a thought process which ought to be of a fairly considered nature and ought to involve a measure of weighing of evidence and judgment. It seems to me that in that context, as in clause 24, to which amendment 34 relates, “considers” is perhaps the more appropriate word, not least because it might be that if a body with a legitimate interest felt that there had not been appropriate thought or consideration given, they might seek remedies elsewhere. “Considers” is often used in such a context to imply a rational and dispassionate way of weighing options and coming to a conclusion. It seems that the requirement is that the local authority should come to a conclusion about the class of persons referred to, so “consider” is therefore a better word.

Put another way, one can conceive of circumstances where “think” can suggest a process that is not an entirely rational, objective or quasi-judicial in nature. One can have an irrational thought and one can have an unreasonable thought. One would hope that a local authority, in this context—[Interruption.]

Nick Raynsford (Labour, Greenwich and Woolwich)

Will the hon. Gentleman give way?

Bob Neill (Conservative, Bromley and Chislehurst)

I am not sure what it was that provoked the right hon. Gentleman to rise. If it was an irrational thought, then I am happy to give way to him.

Nick Raynsford (Labour, Greenwich and Woolwich)

The hon. Gentleman has got me thinking—or perhaps considering. What were the reasons for him choosing to substitute “think” in line 21 with “consider”, but to leave “thinks” in line 22 and not substitute “considers”? What thought process led him to the conclusion that the Bill would be improved by his doing it one way around rather than the other?

Bob Neill (Conservative, Bromley and Chislehurst)

First, it seemed to me that it might be more elegant to have two different words within the same clause—I know that the right hon. Gentleman likes to see elegance in all things. Secondly, two different considerations seemed to be implied. The second “think” is the trigger for the authority—it thinks persons might become liable to the charge but, once it has thought that, it then has to go through a process of consideration. That is implied at the beginning of subsection (1)(c). There are two subtly, but perhaps importantly, different thought processes. The use of “consider” recognises the subtle difference more appropriately and would improve the wording.

Dan Rogerson (Liberal Democrat, North Cornwall)

Amendment 19, which stands in my name, refers to a later clause, but deals with a similar issue—a clear indication that the use of any power requires a little more than some thought.

Clause 24, which talks about a power for a national authority to cancel a BRS. The thought or consideration—whether it is rational or irrational—behind amendment 19 is to ensure that if the Government or any of the national authorities in England or Wales seek to intervene or to act in such a draconian way against a local community which, with its business organisations and representatives, has chosen to move forward on a BRS, they must do so on the basis of some great problem with the BRS, and not because they just happen to be concerned for some reason about one or two aspects of the project involved.

Like the hon. Member for Bromley and Chislehurst, I seek a slight change. Unlike him, I have not had great exposure to legal textbooks. I am sure that I am all the poorer for that, although at the same time I cannot help but feel a bit grateful. I hope that the Minister is able to see the thought or consideration behind the amendment—that there should be a need for a national authority, if it is to act in such a way, to demonstrate that there is a big problem.

Philip Dunne (Conservative, Ludlow)

It may seem strange to rise on a point that, on first sight, appears to be somewhat obtuse. Having said that, we should remember when we draft legislation that the language we use will govern the conduct of local authorities for years if not decades to come and it needs to be as precise as possible.

I have considerable difficulty with repeated use of “think”. I have served on a local authority and I know the processes involved in arriving at decisions when such subjective language is left in legislation. It is possible for an authority’s view to be determined through a process of discussion and, if necessary, vote-taking in a council chamber or committee. “Consider” or “demonstrate” imply that a process has been followed appropriately by the authority, whereas “think” is capable of interpretation by a layman such as I. I do not have the benefit of my hon. Friend’s exposure to interpretation of legislation, and we are merely here to assist Ministers in drafting it, but using more precise language, which implies that a process has been gone through rather than just thought about, would seem to me to be more appropriate. I hope that the Minister will reflect on that and recognise that none of the amendments is contentious and they could, therefore, be accepted.

Sadiq Khan (Labour, Tooting)

I am sure that I speak for the hon. Member for Bromley and Chislehurst, but we do not hold a lack of legal experience against the hon. Members for Ludlow and for North Cornwall.

At the core of the amendments are the relative definitions and strength of “think” versus “consider”, which is the nub of the matter affecting clauses 6 and 24. I shall discuss the effect of each amendment in turn. Amendment 26 to clause 6 would require levying authorities to consult on their BRS proposals. Those consulted would be those liable to pay the BRS, lower-tier authorities in two-tier authorities and other such persons as the levying authority thinks appropriate. Clause 6(5) requires a levying authority in particular to

“think whether it would appropriate to consult persons who the authority thinks might become liable to pay”

the BRS before the end of its chargeable period. When I practised law, I was always in favour of using plain English, not legalese and gobbledegook, where possible. However, with respect, this provision is not the best example of either that hon. Members could bring up. I shall explain why in a moment.

Amendment 19, tabled by the hon. Member for North Cornwall, and amendment 34, would affect clause 24, on to which I am sure we shall come later in proceedings. The amendments would replace “think” in the test of whether the Secretary of State or Welsh Minister should exercise their powers to intervene on or even cancel a BRS. Amendment 26, in the name of the hon. Member for Bromley and Chislehurst, would change “think” to “consider”, which he said implied greater analysis—I think that I have followed the core reasons for his amendment. However, in truth, the amendment would have no effect. As public authorities, local authorities must reach their decisions in a reasonable and rational way, taking account of all relevant information. That includes decisions on whom to consult, where that decision is left to the local authority. In that context, there is no substantive difference between “think” and “consider”. My right hon. Friend the Member for Greenwich and Woolwich demonstrated the reason why there is no real difference—the fact that a change has been proposed to one part of the clause and not another. That proves the point.

Under clause 24, the Secretary of State and Welsh Ministers must also reach their decisions in a reasonable and rational way, taking account of all relevant information. In that context, there is no substantive difference between “think” and “consider”. However, I value and endorse the point that there should be greater analysis—whether by the Secretary of State or local authorities—of an issue when deciding whom to consult or whether to intervene in a BRS. It is only right that all parties involved in a BRS treat seriously the project and proposed supplement. However, on the basis of the substantive effects of the amendments, as I have explained, I hope that the hon. Gentleman will withdraw his amendment.

Bob Neill (Conservative, Bromley and Chislehurst)

I have applied my mind to the Minister’s response. I ascertained his point and understand what he seeks to achieve. I am reassured to a degree on this serious point. He rightly stated that the exercise of the powers in the Bill should be proof against judicial review and meet the standard of the Associated Provincial Picture Houses v. Wednesbury Corporation case. We want to ensure wording that achieves that. I am fortified by the thought of the principle that others can refer to debates in this Chamber when seeking to ascertain Parliament’s intention. Having got on the record the standard that the Minister anticipates and intends that local authorities should attain, I beg to ask leave to withdraw the amendment.

Mark Field (Conservative, Cities of London and Westminster)

I will only detain the Committee very briefly. I have just received from one of my two local authorities—the City of London Corporation—a list of suggested amendments, and I wish to touch briefly on a matter relevant to clause 6: the situation whereby the results of revaluation become known after the initial consultation on a BRS proposal, with the result that properties that were previously below the threshold set in clause 12 move into that chargeable band. I hope that the Minister can give me some guidance, because, as he is well aware, the current revaluation will affect those who are liable to pay BRS. Property values are likely to move in both directions, taking properties in and out of the charge as they cross the threshold, and it is possible that one is slightly less concerned about those that move outside the charge.

The result of the revaluation in London is not due until September. On a highly practical matter, of which I know the Minister is aware, all the London boroughs will have a tight schedule in which to undertake the necessary work for the consultation on, and introduction of, the BRS, so that they meet the proposed timetable in London for Crossrail. It may therefore be necessary to start the consultation before the results of the revaluation are known. Does the Minister feel that it would be satisfactory to have a supplementary, late consultation and to adjust the revised prospectus if it has been issued?

The tight time frame is in part a belt-and-braces concern from the CLC, but there is a concern that the consultation process may start under the terms of clause 6, yet, by the time that the revaluation has taken place, there may be other properties and property owners who should have been part and parcel of it.

Nick Raynsford (Labour, Greenwich and Woolwich)

Subsection (5) imposes an obligation on authorities to think

“whether it would be appropriate to consult persons who the authority thinks might become liable to pay a chargeable amount before the end of the chargeable period”.

I should have thought that that gave an authority the opportunity to consider its overall evaluation schedules, to anticipate whether businesses that are currently below the £50,000 threshold might fall within it at a future revaluation, and, in the interests of safety, to draw the net a little wider in its consultation to avoid the scenario that the hon. Gentleman anticipates. Does he not feel that that provides us with the necessary safeguard?

Mark Field (Conservative, Cities of London and Westminster)

I accept what the right hon. Gentleman says. It is a certain safeguard, but I simply wanted to put the point on the record, and, for the purposes of the ministerial guidance that is published, to alert people, particularly given the fact that we will need a rapid procedure to get Crossrail up and running,. Nothing would be worse than if elements of the consultation were to be subject to a legal challenge by a disaffected property owner or occupier who suddenly found themselves liable for BRS but had not been consulted.

The right hon. Gentleman is right to say that subsection (5) goes some way to meet the CLC’s concerns. I make my point simply to alert people to the fact that the revaluation may be more comprehensive than we thought, and I should just like some guidance on the matter from the Minister.

Sadiq Khan (Labour, Tooting)

I commend the hon. Gentleman on raising an issue that is important to his constituents and to businesses in his patch. We are alive to the strict timelines, and one reason why we were keen for the Bill to make progress was to ensure that it could meet the Mayor’s timelines, notwithstanding the revaluation.

The clause sets out those whom levying authorities must consult before introducing a business rate supplement, as my right hon. Friend the Member for Greenwich and Woolwich said. The consultation will provide an important opportunity for local businesses to scrutinise the proposal and to have their say, including making the point about a possible revaluation. We expect local authorities in practice to develop their prospectus with key business stakeholders, but the clause places a statutory duty on them to consult formally all those liable for the proposed BRS. That is reinforced by the draft statutory guidance that we talked about earlier, which again makes the point that local authorities should consider how they will involve businesses in developing proposals prior to the formal consultation. As such, the prospectus and the business case will benefit from their expertise.

Subsection (1) states that before a levying authority can introduce a BRS, it must consult those who will be liable to pay the supplement. That includes anyone whom the authority thinks, based on its proposal, will be liable to pay the BRS from the day on which the supplement is introduced. That is the important point. The authority will also have a duty to consult anyone whom it considers would have been liable to pay the BRS on the day that it was introduced had they not been receiving 100 per cent. relief from the BRS as a consequence of receiving 100 per cent. relief from paying business rates. Authorities are also required to consult any ratepayer who is likely to become liable for the supplement on the basis that their current exemption from the BRS is likely to cease. For example, if BID levies are to be offset against BRS liability, a ratepayer who is not liable for the supplement when the BRS is first introduced might become liable when the BID is complete.

As well as providing for consultation with those who will be liable for the supplement, subsection (1) provides that levying authorities must consult those individuals or groups whom they consider appropriate who might reasonably be expected to be interested in their proposals. In two-tier areas, they must also consult the lower-tier authorities. Subsection (5) provides that levying authorities must also consider whether it is appropriate to consult anyone who is not liable for the BRS at the outset but might become so: for example, ratepayers whose properties have a rateable value approaching £50,000.

Subsection (6) places a duty on levying authorities to revise the prospectus in the light of the consultation if they think it appropriate to do so. In particular, they must consider doing so if the consultation results in significant changes or amendments to the proposal. The duty will be particularly relevant if any changes to the proposed BRS mean that it will support more than a third of the cost of the project, which will require a ballot.

Whether or not a revised prospectus needs to be published will depend on specific local circumstances, so the decision to publish a revised prospectus will rest with the levying authority. The clause ensures that no BRS will be solely the work of the local authority. Local businesses will always be consulted and be part of the BRS process.

As I said in my introduction—I commend the hon. Member for Cities of London and Westminster for making this point—the draft evaluation list for a 2010 start after revaluation will be published by 1 October 2009. I commend the clause to the Committee.

Clause 9

Dan Rogerson (Liberal Democrat, North Cornwall)

I beg to move amendment 13, in clause 9, page 5, line 25, leave out ‘may’ and insert

‘must within 90 days of the coming into force of this section’.

Peter Atkinson (Conservative, Hexham)

With this it will be convenient to discuss amendment 14, in clause 9, page 5, line 27, leave out ‘may’ and insert ‘must’.

Dan Rogerson (Liberal Democrat, North Cornwall)

At the risk of boring Members who were not present for deliberations on the Planning Bill, I shall again refer back to it briefly. One issue that we debated was that that Bill made provision for regulations, as is customary, but that some of those regulations had a significant effect on how the Bill would affect people in the real world. There was disquiet that the detail of those regulations might influence people’s view of the Bill as a whole, because they were crucial elements of it.

Given that we have had such a lengthy discussion about ballots and when they should be used, it would be useful to tighten up one or two of the regulations. Amendments 13 and 14 would do so, stating that regulations on how a ballot will work should be provided as early as possible. Obviously, the length of time that we have chosen could be made shorter or longer, but it is a means of sending a signal so that people out there in the real world who will need to deal with the provisions will have an early indication, if possible, of how that ballot should take place and what form it should take.

The amendment is probing, but I would welcome the Minister’s point of view. I have proposed one or two other amendments to other clauses in a similar vein. Let us put as much information as we can on the face of the Bill now, so that when other Members get a chance to consider it later, they will know exactly what they are dealing with and be clear about how the provisions will affect business communities and the local authorities forced to carry out such consultations.

Sadiq Khan (Labour, Tooting)

I thank the hon. Gentleman for his probing amendments. I know that he has experience with the planning board, and I can see why he has tabled them. They are interesting amendments that seek to strengthen the provisions in clause 9 in relation to regulations about ballots. None the less, I will explain why they are unnecessary and why I hope that the hon. Gentleman will withdraw them.

Clause 9 enables the Secretary of State to make regulations in relation to the procedure of a ballot on the imposition of a business rate supplement. Among the topics that the regulators may cover are

“the timing of the ballot; the form that a ballot may take; who is to hold the ballot”

and

“the conduct of a ballot.”

Regulators may also provide for the delegation of functions in relation to the ballot.

My right hon. Friend the Minister for Local Government sent a statement of intent to you, Mr. Atkinson, on Friday 23 January, which set out the approach that we intend to take on the secondary legislation that will be needed to give full effect to our proposals for the business rate supplement and to enable levying authorities to exercise the power to levy a BRS. Our intention is that the regulations should come into force as soon as possible after Royal Assent to the Bill. The ballots’ regulations will contain all the procedural detail, and they must be in force before the first business rate supplement can be levied on 1 April 2010. We believe that the regulations should cover the same issues that the hon. Gentleman proposes. With that reassurance, I hope that the hon. Gentleman will withdraw his amendments.

Dan Rogerson (Liberal Democrat, North Cornwall)

I thank the Under-Secretary for his comments. The parallel that I was drawing was with the Planning Bill and the community infrastructure levy. The debate on how that should be implemented has been contentious. I am sure that the parties involved will have their minds focused even more by the economic difficulties that we now face. It was my intention to encourage the Government to be as clear as possible about how the provisions will be enacted, so that the regulators will be given all the information they need as soon as possible. However, I take the Minister’s point that further information has been released. I beg leave to withdraw the amendment.

Clause 10

John Healey (Labour, Wentworth)

We have come to an important part of the Bill, which is the provision that we are creating in the legislation framework for levying authorities to make variations to the business rate supplement when circumstances or conditions require them to do so. In framing this part of the Bill, we aim to strike the balance between allowing the local authority, or levying authority, to respond to the particular demands of the economic development project and the funding that it may require while at the same time giving the businesses that may be affected and may be contributing through a BRS a degree of certainty and a safeguard to allay their potential concerns. In framing the provisions in clause 12, Committee Members will see that we have taken the same approach as we have taken in the rest of the Bill.

It is clearly important for local authorities to have some flexibility to deal with changing circumstances. Subsection (1) allows a limited variation, provided that the possibility of the variation and the circumstances in which it is made are set out in the BRS prospectus; and—this is referred to in subsection (12)—that the variation will not increase the number of people liable to pay the supplement. This is designed to provide some flexibility to ensure that projects that are funded by a BRS can maintain momentum in the event of a change in their economic circumstances or other circumstances.

Let me move on to the safeguards or reassurances to business. Subsection (2) is designed to protect businesses from any unexpected changes in the supplement arrangements. It provides that the levying authority cannot without due consultation make significant changes that were not foreseen at the outset of the process and therefore not consulted on or, in some cases, voted on at the outset. If the authority wants to vary a BRS in a way that was not foreseen and set out in the original prospectus, it will need to consult on its revised plans. Subsection (2) requires the authority to undertake a number of steps: to publish a document setting out the proposed variation; to consult on those proposals; to hold a ballot in the cases in which the variation will mean that the supplement supports more than one third of the project cost or in which there was a ballot on the original proposal; and to publish a revised prospectus setting out the new arrangements, once the variation has been agreed.

Bob Neill (Conservative, Bromley and Chislehurst)

I rise on a genuine point of clarification. As I understand it, if the effect of the variation is that the BRS supports more than one third of the project cost, there must be a ballot. Is that more than one third of the total project cost as revised? What about a situation in which the variation might give rise to the BRS supporting more than one third of the variation? Should there be a ballot in those circumstances, if there is a shifting of the burden and an increase in the burden? I can conceive of such a configuration, depending on the rest of the funding.

John Healey (Labour, Wentworth)

We are trying to provide for variations in the business rate supplement. If there was a ballot on the project in the first place, the position is straightforward. If a variation in the business rate supplement meant that the business rate supplement was bearing more than one third of the total project cost, that would bring the revised BRS into the bracket of requiring a ballot. Those are the circumstances that we have in mind.

Dan Rogerson (Liberal Democrat, North Cornwall)

It is certainly reassuring to hear what the Minister is saying about the matter. I just seek clarification again. He has probably addressed this point, but I would like it to be absolutely clear. I am talking about subsection (7)(b), which begins:

“the document published for the purposes of subsection (2)(a) states that, even though paragraph (a)...does not apply”.

This relates to what he said about a situation in which the local authority for some other reason decided that a ballot was necessary on the original proposal. The provision is at the top of page 7. It concerns a situation in which the local authority decided to go to a ballot even though it did not have to on the original proposal. If it called for a ballot on the original proposal, will it now automatically go to a ballot in the event of a proposed variation, or does it again get to decide whether that is necessary? I would like that to be addressed. If it is automatic that a ballot at the beginning means a ballot on a variation, that addresses the point, but if the local authority gets to take a view for a second time, one could conceive of a situation in which there had been a ballot that approved the proposal, but the variation meant that perhaps the original ballot—[Interruption.] I hope that the Minister can understand the point that I am trying to make.

John Healey (Labour, Wentworth)

The hon. Gentleman will find by careful reading of subsection (2)(c) alongside subsection (7)(b) that the provision means that, irrespective of the reason for the ballot in relation to the original project and BRS proposal—whether it was required under the one third rule, or the local authority decided to hold a ballot despite not being required to do so—a formal variation to the BRS that was not anticipated and set out as a possibility in the prospectus would follow the same procedure as the original introduction. Therefore, the provisions are intended to say that if there was a ballot on introducing the BRS and there is a significant variation that was not covered in the prospectus, there should be a ballot for the variation as well.

Brian Binley (Conservative, Northampton South)

The clause is particularly confusing. If a variation demanding more money by way of the levy is refused by business and the ballot goes against the local authority, who then foots the bill, given that the project is under way, or could be under way?

John Healey (Labour, Wentworth)

The variation may be a downward variation, because the project economics may have changed. It may not be an upward variation, but in the circumstances that the hon. Gentleman anticipates, if the ballot went against the variation, that variation could not be made. If there was then a project shortfall, there would clearly be a challenge for the project sponsors and the project authority to deal with it in a way that was different from the variation of the BRS that they were proposing. There is not a single answer to who might pick up the shortfall or how it could be dealt with, as he will appreciate. The important thing for the purposes of the Committee and the legislation is that if a ballot is held in order to introduce a variation to the BRS and that ballot is not carried, the variation cannot be put in place.

Brian Binley (Conservative, Northampton South)

I am most grateful for the Minister’s great generosity. He mentioned that the local authority could have overestimated the amount of money needed from business as a percentage of the project. Is he therefore suggesting that, in certain circumstances, business might get a dividend, a repayment?

John Healey (Labour, Wentworth)

I would not necessarily describe it as a repayment or a dividend, but the hon. Gentleman will appreciate that we have built into the power to design and introduce a supplement certain flexibilities for a local authority. It can introduce it at a lower rate than the 2p maximum. It can introduce it and create the liability for businesses that are above the threshold only, so it need not be £50,000 plus, it could be £60,000 or £70,000. That is a decision that local authorities could take. There is also the flexibility to phase in the introduction, so the local authority might choose to introduce it at a rate of 0.5p in year one and 1p in year two. There is also flexibility in how to deal with the potential liability of empty properties.

A number of factors provide flexibility for the local authority. We tend to dwell on the limits to the supplement—the £50,000 rateable value threshold below which no business rate payer would be liable, or the 2p maximum supplement—but the design and introduction of the levy could be different, although within those flexibilities and parameters. To return to the original question, it may be that the variation will benefit the business rate payers that are liable for the levy, although that benefit should perhaps not be described as a dividend. There could be a variation to the threshold, or the rate, or to something else within the flexibilities that local authorities will have within the design of the legislation, which would benefit the authorities concerned.

Subsection (2) sets out the requirements of an authority in those circumstances. Subsection (3) sets out what the document explaining the proposed variation must specify. I hope that members of the Committee would agree that the requirements to consult and the conditions that must be met for the introduction of any variation to the BRS will give businesses real confidence that a BRS will not be altered without serious and due consultation. In practice, any local authority that even contemplates a variation on an established BRS will examine the case with the principal interest groups in its area, not least business itself, before any formal consultation point is reached. We can reasonably expect that any variation will not come as a surprise to those businesses that are liable to pay a BRS, or to any groups with a critical interest in the BRS and the project that it supports.

Subsections (7) to (11) cover the arrangements for ballots in case of variation. We have dealt with the circumstances in which that would be necessary, but the subsections capture them. Subsection (10) describes the wording for any ballot, following the model of the original wording proposed in the Bill.

Finally—

Mark Field (Conservative, Cities of London and Westminster)

Normally when a parliamentarian says, “Finally,” he is about 40 per cent. of the way through his speech, so perhaps my intervening is not too much of an imposition—[Interruption.] I am being unfair to the Minister.

The logical way of easing the pain on the variation is simply to add a certain number of years to it. It would not mean additional money, and the percentage would not be seen as being of a bigger pot; there would just be a significant extension to the number of years that the BRS operated. Does the Minister have any guidance on variation? Presumably, if we extend the period of a scheme for which there is likely to be a BRS from 20 years to 40 years, that takes it well outside the realms of what was envisaged at the outset. Indeed, one envisages, therefore, double the money going in to the BRS over that period. Does the Minister intend to give any guidance, or does he have any thoughts about variation? Would it necessarily mean the sum paid, or the duration of the scheme? Does he feel that the pill could be sugared more easily by adding to the duration—adding some years further down the line—rather than by adding a surcharge, which would make the whole scheme larger? Has he given any thought to how a variation would operate? I appreciate that the Government have gone into considerable detail to ensure proper re-consultation and a further ballot, but, in practical terms, what will a variation mean?

John Healey (Labour, Wentworth)

We have given a lot of thought to how a variation might operate and be required, but, in the legislation, we have tried to frame a general approach whatever the precise details of the proposed variation. I had not mentioned it, but the hon. Gentleman is right that a variation might well be the length of the project to be financed and, therefore, the length of the BRS term. I shall take the Mayor’s proposal for a 24-year term for Crossrail, for instance. In preparing for a business rate supplement, he might say, “We proposed it for 24 years, there may be circumstances in which we would have to extend it to 30, and the circumstances that might require us to do so are X, Y, Z.” If that potential variation had been set out in the prospectus, it would fall within the terms of the clause in the way that I have explained. If the potential variation was not foreseen or set out in the prospectus as I have explained, a fresh process of consultation with the prospectus and the details would need to be published.

If a ballot was used for the BRS in the first place, that would of course be used again. Also, if a variation would take the proportion of the project funding over one third, a ballot would be required for that variation, whether or not one was in place when the BRS was first introduced. On that basis, I hope that hon. Members will be content for clause 10 to stand part of the Bill.

Bob Neill (Conservative, Bromley and Chislehurst)

I am grateful to the Minister for his careful and detailed explanation of the effect of the clause. I do not think that there is a great deal of difference between us in what he is seeking to achieve, but I will highlight the areas for concern flagged up in our evidence sessions and elsewhere. I hope that the Minister will be able to reassure us that the Government are alert to them.

The concerns relate to two things. I hinted at one in my intervention, although perhaps I did not make it very clear. A variation of the BRS that does not fall within the existing criteria for triggering a ballot could still shift the burden of funding within the BRS scheme. For instance, it could be proposed initially that a fifth of the costs of a substantial scheme would be met by the BRS and the rest would come from various other funding streams, but for reasons that arise, it could be proposed to raise extra moneys by varying the length of the BRS or the amount of the contribution within the parameters. That could increase the BRS element from a fifth to a quarter, or to 30 per cent. That would fall just short of the threshold for triggering a ballot, but it would shift more of the percentage burden on to the BRS, perhaps because another funding stream did not come forward or additional unforeseen costs arose.

In such circumstances, consultation must be undertaken, but the businesses have no means of preventing the change. There is a danger that cost overruns, whatever the cause, could easily be shunted on to business without the need to go back to seek proportionate contributions from other funding streams elsewhere. Will the Minister enlighten us as to what safeguards the Government envisage to protect the BRS payer from being disproportionately affected by variations that might change the amount of funding?

I think that the Minister is alert to my second point, because the Government flag it up in their consultation document on the draft guidance. What is to be done to meet businesses’ fear that variations might be used as a way to make up for lazy or inefficient costing at the initial stage, and how will the Government deal with the risk of cost overruns occurring and being passed on disproportionately or wholly to businesses through the BRS element of the scheme?

The Government have issued some guidance. It is on page 18 of the consultation document. It starts with the question of assessing project costs for the one-third test. It is helpful as far as it goes, but it raises a question that it does not answer. It recognises what is called, in technical terms, “the optimism bias” in assessment of costs. That is a wonderful phrase. I was not surprised to find it defined, referred to and dealt with in a document emanating from the Treasury. Some of us might think that the Treasury had optimism bias for a number of years, but apparently it is in the Green Book.

The document says:

“Optimism bias is the demonstrated systematic tendency for appraisers to be over-optimistic about key project parameters, arising particularly in relation to: capital costs; works duration; operating costs; and under-delivery of benefits.”

One might say that that refers to the Olympics budget. However, in reality, that is a fair and sensible point. The Green Book contains further information, but the very fact that that reality has been flagged up needs to be addressed carefully if businesses are not to feel that the floodgates have been opened—so to speak—by variation. The result could be a series of variations that salami slice further contributions to make up for the failure to take proper account of that optimism bias.

Philip Dunne (Conservative, Ludlow)

Does my hon. Friend agree that the NHS IT project is a fine example of where optimism bias has coloured the delivery of a project for close to a decade?

Bob Neill (Conservative, Bromley and Chislehurst)

My hon. Friend is absolutely right; that is probably as good an example as one could come up with. It demonstrates why it is important to put safeguards in place.

John Healey (Labour, Wentworth)

Does the hon. Gentleman also appreciate that the example cited by the hon. Member for Ludlow is entirely beyond the permissible range of what could be relevant to a business rate supplement?

Bob Neill (Conservative, Bromley and Chislehurst)

I am deeply reassured by the Minister’s point, as I am sure is everyone else.

With the best will in the world, there is often a tendency for those drawing up project costs in the public sector to be, for various reasons, unduly optimistic about their appraisal. Interestingly, that is recognised in paragraph 3.40 of the draft guidance defining acceptable project costs. It makes the point that the

“authorities should be mindful...and pay regard to the fact that the assessment undertaken”—

internally and by themselves, in the—

“early stage scoping and feasibility work may not accord with the perspective of local businesses.”

Harking back to an earlier debate, when the Minister mulls the matter over he will appreciate that that is a very good reason why we should ensure real buy-in by businesses into the delivery of the scheme. It will make that unintended, but not infrequent, consequence less likely to occur. I raise those caveats. I am not saying that we oppose the clause, but underlying issues remain that I am not entirely convinced have been taken on board. I hope he can reassure us a little that, one way or another, they will be.

Philip Dunne (Conservative, Ludlow)

Will the Minister enlighten the Committee on the thinking behind making the rules and, in particular, variations on ballots so different from the balloting process applying to BIDs? In particular, I am concerned that variations could be used, if a project overruns its original cost estimate, to extend the applicability of the BRS to a wider range of businesses that might not be consulted on the variation because they were not consulted on the original ballot. If I understand correctly, the beauty of the BIDs balloting process is that it is a dual voting system. Businesses not liable to pay the bids levy have the opportunity to vote, because as they grow they might become eligible for the scheme. A dual balloting system allows rapidly growing businesses that would have been eligible at the time of the original ballot, had they been that big at the time, to have a voice. Looking into the future, flexibility in the rules on variations, as in the BIDs model, would have some merit.

John Healey (Labour, Wentworth)

The hon. Member for Ludlow was not with us at the start of our proceedings this morning, when we had a detailed discussion on the principal basis on which it is right to hold a ballot on a BRS. In particular, we discussed why, in this respect, our approach to BRS is different from our approach to BIDs. On BIDs, of course, every business in the proposed area will have a vote, irrespective of size, and may make a contribution. I do not propose to rerun the arguments for our proposals for balloting on BRS, but no doubt the hon. Member for Ludlow will be able to consult the Official Report and come back if he feels that we have not dealt with the issue.

On the concern expressed by the hon. Member for Bromley and Chislehurst, if the variation changes the proportion that the BRS contributes to a project from a fifth to a quarter—as he suggested—or to 30 per cent., we still propose to take the approach with the variation that is entirely consistent with the one that we take for the ballot for the BRS in the first place. I explained in my opening remarks the safeguards that are in place for businesses and the requirements that will be in place for local or levying authorities in such circumstances.

In response to the hon. Gentleman’s concern about cost changes, whether they come from cost creep or optimism bias or any other factor that might come into play, he may be interested to know that there is a requirement in paragraph 23 of schedule 1—we have already debated that schedule—for the local authority, in producing its prospectus for a business rate supplement, to consider carefully and to consult on the policy that it would have if the project were to

“(a) cost more than the authority was expecting;

(b) take more time to complete that the authority was expecting;

(c) cost less than the authority was expecting;

(d) take less time to complete than the authority was expecting.”

No business will therefore be in any doubt about the approach that the authority anticipates taking in such circumstances. I hope that that reassures the hon. Gentleman and enables him to accept that the clause should stand part of the Bill.

Bob Neill (Conservative, Bromley and Chislehurst)

I understand what the Minister says and I do not think that we will seek to vote against the clause. I hope that he will reflect, and at an appropriate point, or perhaps now, confirm that he would anticipate that if an authority were to set out its policy on these matters in such bland terms that it amounted to a statement of the obvious—such as, “It is the policy of the authority to avoid cost overruns”—that would not be adequate to meet the requirements of the Bill and there should be something specific in the authority’s review and monitoring arrangements to ensure that such a thing did not occur. Otherwise, one can envisage that no authority will say that it is its policy to incur cost overruns. The danger is that one does just enough to make oneself safe from judicial review, but not enough in practice to carry out the monitoring.

None

John Healey (Labour, Wentworth)

The clause sets out who is liable to pay the BRS. It provides that any person who is liable to pay non-domestic rates for a property is liable also to pay a BRS, subject to certain important exceptions. Crucially, the clause provides that a person is not liable for a BRS if the rateable value of their property does not exceed the amount prescribed by the Secretary of State in regulations made under clause 12. We made it clear in the October 2007 White Paper, and it remains clear, that we intend to set that threshold at £50,000 rateable value. In addition, liability for the BRS does not apply to owners of empty properties where there is a zero liability for non-domestic rates, particularly charities and community amateur sports clubs, or if the levying authority, under the powers given to it in the Bill, has exempted owners of empty properties from the BRS.

Subsections (4) and (5) provide the technical basis for determining the BRS. They explain that it is done by calculating the amount for each day of the year on which the ratepayer will be liable for the BRS and totalling those daily liabilities. Subsection (6) defines the chargeable period for a BRS as the period for which the supplement is imposed. Crucially, subsection (6)(b) prevents the chargeable period starting before the day on which the supplement is introduced; that will prevent retrospective liability accruing before that day. Subsection (7) limits the length of the chargeable period to that specified in the final prospectus unless the period has been extended in accordance with clause 10.

I shall leave it at that, Mr. Atkinson. I hope that the Committee will agree to the clause standing part of the Bill.

Bob Neill (Conservative, Bromley and Chislehurst)

I seek to raise two issues with the Minister. I suspect that other hon. Members will wish to speak on them.

We are now, in shorthand, dealing with the question of the thresholds. The Minister will know from the evidence given to the Committee that there is some concern about how a threshold is arrived at. One knows the Government’s intention to set a threshold of a rateable value of £50,000, but we are concerned about what will happen in future, particularly in the light of the fact that there will be a revaluation of business rateable values in 2010. I understand that the base data for that will probably go back to 2008.

Will there be enough flexibility to reflect the changed economic circumstances in a swift and timely manner? The particular concern, of course, is that for many businesses cash flow is now the key to survival. They would not want to be faced with a likely increase in burden simply because of a fiscal drag in the threshold that might suck them in. They will want some reassurance on that point.

Some who gave evidence suggested that the figure of £50,000 should be included in the Bill. Indeed, an amendment to that effect has been tabled by the hon. Member for North Cornwall. I am not convinced, however, because doing so would make it difficult to assist business by raising the threshold to take people out of tax. Primary legislation would be required, which is why I am not particularly attracted to that argument. However, the underlying concern is real; businesses will want a little more detail and more reassurance from the Government.

The second point, which is related, is a genuine inquiry; it may not take us any further. I wonder whether any thought has been given to small companies being treated under the section 382 provisions of the Companies Act 2006, when considering whether they met the other tests for threshold liability.

Mark Field (Conservative, Cities of London and Westminster)

I wish to follow up the point raised by my hon. Friend the Member for Bromley and Chislehurst, which he made very well. We are clearly in more difficult economic times. The Minister is right—I agree with my hon. Friend in that regard—that it is better to have flexibility in the Bill rather than take up the superficially attractive proposition made by the Liberal Democrats.

What was the thinking behind the £50,000 limit? Was it intended to encompass a certain proportion of business, or is there something else implicit in that sum? It is in no one’s interests to talk the economy down, but if it were to happen in the retail sector, would it have a significant impact by bringing more businesses within the BRS fold? In the Government’s mind, are the provisions currently designed so that a certain proportion of businesses should fall foul of or come within the BRS area?

Let me add that one reason why I left earlier today—some slightly cheerier economic news—was that I had a lunch at the Regent Street Association, a big retail association. Its news was much more positive than some of the more gloomy retail news that one hears. [Interruption.] I would certainly not use that word, and the Under-Secretary would be most ill-advised to use it—hopefully it will not appear on the record.

I had a point, however. Where retailers are flexible, have a quality offering and, in fairness as in central London, have a large tourist market—we have felt the benefit of a lot of European and American tourists coming here, our currency having devalued in recent months—the situation is somewhat less gloomy than many of our newspapers and other media outlets would have us believe. That is not to be in any way complacent, but there is a mixed picture.

I was trying to get to the bottom of the Government’s thought processes. Were they trying to attract a certain proportion of businesses into BRS, or was there something magical in their own mind, at this juncture, about the £50,000 limit?

Brian Binley (Conservative, Northampton South)

I do not want to disappoint the Government too much, but I can tell them that the reflections of my hon. Friend the Member for Cities of London and Westminster would not be my reflections from Northampton as to the well-being of the retail sector, frankly. It may be that he represents a slightly more affluent body of electors than I do. That may be the explanation.

Lee Scott (Conservative, Ilford North)

Does my hon. Friend agree that, with the announcements that we have seen just in the past 24 hours, such as Barratts shoe shops going into administration with the possible loss of up to 400 jobs, the implications of the business rate supplements are grave for a number of businesses? We should be concerned about that.

Peter Atkinson (Conservative, Hexham)

Order. I urge the hon. Member not to reply. We are not having a debate on the general health of the economy. We are talking about something rather more limited.

Brian Binley (Conservative, Northampton South)

I of course accept your guidance and advice, Mr. Atkinson. I dare not do otherwise. However, I seek your guidance because we seem to be straying into clause 12.

Peter Atkinson (Conservative, Hexham)

Indeed. We are in danger of straying into clause 12, and we have an amendment next with which we can discuss the £50,000. Members, bear that in mind, please.

Brian Binley (Conservative, Northampton South)

I shall make my remarks on the threshold with that amendment.

Philip Dunne (Conservative, Ludlow)

In relation to the clause, during the evidence session with the Minister I asked why exemptions would not apply to public buildings of more than £50,000 rateable value. The Minister gave me a clear reply. I asked if he would look again or explain why, in relation to the exemptions permitted under subsection (3)(a), the levy would not apply to those properties exempted under section 45A of the 1988 Act. That would not appear to cover many properties owned by types of entity that were perhaps not in contemplation under the 1988 Act, because the form of incorporation may not have been established or used for comparable purposes. I am thinking of premises used by entities that may not be charities but which have a charitable purpose, such as social enterprises, not-for-profit organisations or companies limited by guarantee, which are themselves not for profit. Such organisations should have the benefit of the same reliefs as those that do happen to be established as charities, perhaps for historic reasons. I urge the Minister to consider broadening the exemption from the non-domestic rate in the first place to such categories. If he cannot bring himself to do that in this clause, perhaps he will consider extending the reliefs available under clause 15 when we get there.

John Healey (Labour, Wentworth)

I will deal with the points in reverse order, if I may, beginning with those made by the hon. Member for Ludlow. I will look at the Official Report, but I was not clear what sorts of organisation or business he was arguing should enjoy reliefs from the business rate supplement when reliefs are not established as part of the business rates system. As I have explained to the Committee, we are trying to build the business rate supplement to follow precisely the terms of the business rate system. It is less complex, more certain and, it seems to me, more equitable to do so.

The importance of the measures in clause 11 that the hon. Gentleman mentioned is that community and amateur sports clubs and charities already have an established relief in mainstream business rates legislation. We propose to carry that over with the business rate supplement. I am not sure that it is consistent or the right place in practice to introduce new entitlements to relief from business rate supplement if those are not already established within the business rate system. As I said, if I might have some clarification about whose interests he was arguing for, I will consider the matter, but that is our approach.

Philip Dunne (Conservative, Ludlow)

I am happy to help the Minister. We talked about it in the evidence session. I referred to publicly owned buildings such as schools and hospitals, and he made the same point then that he clarified just now. I was considering entities similar to those exempt under subsection (3)(a), such as social enterprise and not-for-profit organisations.

John Healey (Labour, Wentworth)

Unless such organisation have an established right to relief within the business rates system as charities—many social enterprises are also registered charities—or community and amateur sports clubs, some of which are also registered charities, it does not seem consistent or appropriate to create new categories of relief within business rate supplement legislation. That is a matter for mainstream non-domestic rates legislation.

Bob Neill (Conservative, Bromley and Chislehurst)

That is helpful. The Minister makes the point about not desiring to create new categories of relief. May I take it, then, that no representations have been made to him from any source seeking to create new categories of relief through the Bill? For example, new businesses might be exempt from liability to the business rate supplement under the Bill.

John Healey (Labour, Wentworth)

I have had no representations sufficiently persuasive for me to believe that the current approach is the wrong one. Clearly, if that becomes a matter of debate, it is a matter of debate, and we will deal with it as and when it arises.

Bob Neill (Conservative, Bromley and Chislehurst)

I know that the Minister will take this in the spirit of genuine inquiry in which it is meant. Has he had any representations from Members of either House in relation to the matter that I just mentioned?

John Healey (Labour, Wentworth)

Not as far as I am aware. Certainly no amendments have been proposed to the Bill from the other place; no doubt that will come. I was pleased to hear about the good lunch had by the hon. Member for Cities of London and Westminster and interested by the reflections of the people with him. Despite things being tough economically at the moment, it is something of a mixed picture. I know that better than most, having been at home last night in Rotherham, where the constituency faces 713 redundancies at the Corus works at Aldwarke in Parkgate. Incidentally, it is probably one of the most efficient steel-making plants in western Europe, producing some of the best steel anywhere in Europe. It is also true that many other companies are proving resilient to recession, including, I am glad to say, some in that constituency. We will return to the points that the hon. Gentleman was trying to make about the threshold when we reach clause 12, Mr. Atkinson, as you have encouraged us to do.

Finally, the hon. Member for Bromley and Chislehurst referred to a concern about the impact on small companies, and he may recall how, in an earlier sitting, we dealt with the prospectus—the work, the analysis and the assessment that will have to be undertaken as part of any case that a BRS may support. That is where the work on the costs, the potential impact and the wider economic benefit of the businesses that may be liable for a BRS will have to be laid out. We are keen to encourage that. It is clearly an important part of the assessment of the pros and cons of any BRS and, on that basis, I hope that Members will be happy to allow the clause to stand part of the Bill.

Clause 12

Dan Rogerson (Liberal Democrat, North Cornwall)

I beg to move amendment 16, in clause 12, page 8, line 21, leave out ‘prescribed by regulations’ and insert ‘specified in subsection (1A).

(1A) The amount is £50,000.

(1B) The amount in subsection (1A) may be amended by regulations.’.

We turn to the question of an amount, £50,000, in connection not, I hasten to add, with any proposed amendments to the Bill, but with the threshold that the Government are minded to implement through regulations. In the debate about the previous set of amendments, I made the point about being clear to people about what is intended, and the Minister is absolutely right that he and his colleagues have signalled that intention throughout. However, it is an important principle that, wherever possible, as much information as possible be provided in the Bill.

On the amount, we heard witnesses from the Royal Institute of Chartered Surveyors, who thought that the threshold was too high, and Dr. Grail, from British BIDs, who thought that it was perhaps too low. So, I am not entirely wedded to £50,000; the point is that, as early as possible, the Government’s intention should be published in the Bill. However, on the point raised by a Conservative Member about the amount being fixed in primary legislation, the amendment would allow it to be changed by regulation, as is the case in the current circumstances. An amount would be mentioned to start with, but we could revisit it in secondary legislation. The amendment’s only significant change would be the introduction of a starting point.

That is an important principle. These are highly significant changes to the operation of the business rate in the areas where it will be applied, and affected businesses will expect not only to be consulted on individual projects and, wherever possible—although sadly not in every case—to be consulted through a ballot, but to have every indication of how the provision will begin to bite, so that they can begin to plan accordingly. The principle is not that I think £50,000 is necessarily the right amount for ever, but merely that it is a starting point that might be amended by regulation; otherwise, the issue will be left hanging as the Bill makes its way through the House, and at some point regulations will be introduced. It is a fairly straightforward amendment, and I should be interested to hear the views of other Committee members.

Bob Neill (Conservative, Bromley and Chislehurst)

Understanding as I do the motivation behind the amendment of the hon. Member for North Cornwall, for the reasons I advanced earlier in relation to previous amendments I am still not convinced about putting a sum in, even with the caveat of making it changeable by regulation. That would take us back to where we almost are anyway, where it can be changed by regulation in any event. However, the hon. Gentleman raises an important point that we need to explore. How is the £50,000 figure arrived at? What magic—or otherwise—is there in that, and what justification do the Government use for that?

I am conscious that that figure stems partly from the Government’s impact assessment and other soundings that it has taken. The impact assessment was, I believe, signed off on 28 November. However, although it is not apparent from the document—I am sure that the Minister can help us here—I imagine that the field work for that would have been taken among the business community at an earlier stage, when the degree to which businesses would become hard pressed by the recession was perhaps not apparent.

What thoughts have the Government had of reviewing the appropriateness of their initial estimate of £50,000 in the light of the ongoing economic developments and downturn that we been discussing? In a sense, £50,000 is signalling up what the Minister’s starting point for the regulations will be, and in a way I am grateful to him for doing so. Without even getting to the stage of introducing regulations, should he be thinking again as to whether £50,000 is the appropriate starting point—never mind whether we then need a power to vary it subsequently in the light of further developments? Have events since that idea came into his mind, and since the impact assessment, not already given rise to a need to revisit it? A commitment to do that before the Bill is enacted and the regulations are brought in would be a welcome reassurance to businesses.

Brian Binley (Conservative, Northampton South)

My hon. Friend the Member for Cities of London and Westminster referred to retail in Oxford Street. We all know that the value of the pound has impacted massively on that area. I did not want to raise the hopes of Government Members in that respect.

I support the overall thrust of this amendment and the concern behind it. However, my reason for not being able to support it is that I genuinely think that it will build into the Bill a level which may well need to be higher. My concern is that the Government are minded to have a £50,000 limit, and I should like the Minister to say where the information came from to convince the Government that they should set the limit at that level. It is a pretty important figure and will impact upon the way people think about the Bill for many years to come. We are not talking about a frivolous figure picked from the air; it will have real import for business for many years.

I am concerned about that level, not least in relation to when the Bill takes effect, which is not until April 2010, as I understand it. That coincides rather nicely with a rate revaluation that is due to take effect that year. The concern must therefore be that many more businesses than we might think of at the moment will be caught in the BRS net because of that revaluation. Whereas £50,000 may seem a sizeable figure at the moment, it may be that after revaluation it will not seem so at all. That concerns me enormously, and I would like to hear the Minister’s thoughts about that situation.

We are not sure about the Government’s thinking in the longer term and we are not sure whether they will increase the level in relation to revaluation. The chances are that, because they have said that they are minded to introduce £50,000, that will not be the case, so we can expect many more businesses to be involved. I have an especial concern in that respect for retail. Section 31 of the impact assessment, on page 13, states:

“BRS will be based on the RV of non-domestic properties. Therefore, businesses likely to have high rateable values, such as retail, could be disproportionately affected by BRS.”

That is immensely concerning. It is true that in the big city areas, most of the town centre businesses in particular, which sit in the areas of high rateable value in the centres and the main shopping areas of towns, lease their buildings. Section 31 goes on to tell us that

“businesses which do not own their properties are likely to bear significantly less of the cost than owner occupiers.”

That suggests that the whole process that has created what many call “clone Britain” in our high streets will be accentuated, accelerated and added to by the measure.

There is no doubt from a retail perspective that it is in the interests of a retailer not to own the property that they operate from. That is clearly stated in the assessment. That may be very well for Oxford street, where the big companies do not own the properties and lease them, but it is not very helpful for many of the businesses in our county towns and country towns, where the owner-occupier is the person who runs the business.

I have been immensely concerned about the decline of our community hubs in such towns and areas. Indeed, I had the privilege of heading up a commission that reported on that last July. There is no doubt that there is deep concern about the way in which our town centres in such areas are being denuded. They are being turned into clone Britain in one instance, and in other instances local businesses are being forced out. The vital point is that this will bear most heavily on the owner-occupiers of businesses in such towns, and it could be the last straw that breaks the camel’s back. If that is the case, we will do immense harm to those town centres in rural areas by this very activity. That is why I ask the Minister to consider, in the light of revaluation, an increase in the level at which BRS becomes relevant, in order to give some protection and hope to those businesses that will fall into this net on the basis that they are retailers and also own the property. It will fall most heavily on that particular group of business men in this country, to our detriment.

Lee Scott (Conservative, Ilford North)

On this occasion I shall attempt to get my words to the item and I will not deviate whatsoever. My concerns are the same as those of my hon. Friends. Regarding my own constituency, in the current economic conditions, I would ask the Minister to look at reconsidering the level that has been set. I accept that there needs to be a level of flexibility and that the situation may differ from one region to another. As we heard from my hon. Friend the Member for Cities of London and Westminster, areas such as Oxford street and Regent street are different from my high streets of Barkingside, South Woodford and Hainault. I am sure that they would like the level of business that happens in Oxford street and Regent street, even in the present climate. However, we need an increase on the limit. The figure is not appropriate at this point. I do not believe that most businesses in constituencies up and down the country will be able to thrive with such a figure. We may be able to reconsider that view in the future, but at this juncture, I ask the Minister to look again at the limit.

Philip Dunne (Conservative, Ludlow)

On the amendment and the figure proposed by the hon. Member for North Cornwall, it would be helpful if the Minister—using the work in the impact assessment—clarified whether the data collected in 2007, which estimated that 90 per cent. of properties fall below the £50,000 threshold, were primarily used to justify setting the threshold at this level. If the revaluation, to which my hon. Friend the Member for Nottingham—

Brian Binley (Conservative, Northampton South)

Northampton.

Philip Dunne (Conservative, Ludlow)

Indeed; Nottingham is another strong retail town. If the revaluation gives rise to a significant increase in the rateable value of properties, has the Minister done any analysis of what proportion of properties will fall below a threshold if it was set at a higher level?

Bob Neill (Conservative, Bromley and Chislehurst)

In the light of the observations made by a number of hon. Members, I should like to add some thoughts for the Minister’s consideration. The points that have been made are supported by some of the evidence given in the evidentiary sessions. I am referring to the question about whether the threshold should initially be set higher than the proposed £50,000. The British Retail Consortium tends to support the view that the downturn is disproportionately affecting the retail sector, and that the £50,000 is not a safeguard against that. Jane Milne said that over the coming months, it is expecting to see some 40,000 jobs go in the big chains. Those retailers may well be occupying premises that are above the current threshold and they will, therefore, be caught. None the less, they are as liable to be affected by this as any other organisation. I am talking about their cash flow and the risk to jobs.

Ms Milne also raised concerns about the cumulative effect of the measure together with the annual uplift and the quinquennial review coming up in 2010. She was thinking of a £1.6 billion increase in business costs over that period. Some 90 per cent. of that was the result of the mixture of the uplift and the revaluation. Therefore, is that an argument for having the initial threshold set at a higher figure, because it would take more people out of liability?

There was support for those concerns in the evidence from Julian Lyon from the CBI. He said:

“From the point of view of the £50,000 threshold, or whatever the threshold is, it is important to understand how business rates work in the market to establish whether the threshold is an appropriate mechanism.”——[Official Report, Business Rates Supplements Public Bill Committee, 20 January 2009; c. 34, Q140.]

The Minister will recall that he gave evidence of what could be an arbitrary working of the market. Businesses occupying a couple of floors rated as individual hereditaments could fall below the threshold, but if they have two floors that are on a single lease, or on a hereditament, that would fall within the scheme. That could mean that many high street operations have two separate leases and two separate hereditaments with a rateable value of—let us say—£40,000 each, which means that they are not caught. If they have them on a joint lease, a single hereditament, and their rateable value is £60,000, they are caught and it will make an enormous difference to their business. Should that not be a reason for revising the starting point of the threshold?

Let me refer to the evidence of Dr. Grail, who was seen as an impressive witness by hon. Members from all parts of the House. She, too, had a concern. She said:

“Another thing that I wanted to mention was raised previously—the threshold. The earlier paperwork”—

I think that she was referring to things such as the impact assessment—

“suggested that a £50,000 threshold would safeguard BIDs.”

She was concerned about the interaction of the business rate supplement with BID levies and the fact that that might damage the willingness of organisations to go into BIDs, but she was interested in this case in whether the threshold had a particular effect. In relation to the suggestion implicit in the impact assessment that a £50,000 threshold would tend to safeguard BIDs, because many companies would not be affected, she said:

“Our evidence is to the contrary. We have done detailed analysis of 23 BIDs around the country—all different sizes and types—and 86 per cent. of the BID levy is over the threshold. In London, only one BID is unaffected by the threshold—that is, it falls so far below it that...it would be okay. The rest are not safeguarded by that figure at all”.

Her conclusion was that if we want one of the impacts of the threshold—I appreciate that it is not the sole impact—to be safeguarding the viability of BIDs,

“the threshold needs to be way higher, to give the majority of BID levy payers a safeguard.”——[Official Report, Business Rate Supplements Public Bill Committee, 20 January 2009; c. 53, Q212.]

Does the Minister not think that that evidence, which we heard only last week, strongly reinforces the arguments advanced today by hon. Members for revisiting the appropriateness of £50,000 even as a starting point, never mind what flexibility we build in later?

Nick Raynsford (Labour, Greenwich and Woolwich)

I shall be brief. I simply want to bring us back to reality rather than theory. The hon. Member for Northampton, South stressed that he was a practical man and did not want to talk in theoretical terms; he wanted to examine the impact. I remind Opposition Members that the Mayor of London has made it clear that he requires the revenue predicated on the £50,000 threshold for Crossrail, and that if they press the case for amendment of the threshold, which would reduce the number of potential business rate supplement payers, that could damage the funding of Crossrail.

Opposition Members have said that they support Crossrail. They have said that Crossrail is an exception and because it is an exception, they accept that it should proceed without a ballot. Of course, they have the Mayor of London in their party and they have made it clear that they support what he is doing. I just put it to them that if they believe that, they should tonight accept the logic of the £50,000 figure on which the modelling has been done and examine the evidence from the Mayor of London, which shows how that disproportionately focuses the business rate supplement levy on properties predominantly in central London and along the main axes—

Brian Binley (Conservative, Northampton South)

I am most grateful to the right hon. Gentleman for giving way. He is held in very high regard in Northampton, not least because he is a native of the town. Will he accept that this is the weakness of tying in Crossrail in this respect? Although it might be important for Crossrail to raise that amount of money, should the fact that it may well be doing sizeable damage to the societies in other parts of the country not be considered? Should we not be fighting for our communities and saying, “Maybe we ought now to look again at Crossrail, not least because you won’t get a return from the City anywhere near the size of the one that you expected when you first talked about the financing arrangements for Crossrail”?

Nick Raynsford (Labour, Greenwich and Woolwich)

The answer is no because, as the hon. Gentleman will know, the Bill provides the flexibility for authorities to choose alternative thresholds. If they want one higher than the minimum, they can raise it. I hope, therefore, that if Northampton chooses to consider the possibility of a business rate supplement and the hon. Gentleman’s fears are real, he will prevail on the local authority, along with the business community in Northampton, to go for a different figure to reflect that point. The flexibility is there to do so. But the key point is that the project that depends on the passage of the Bill, the project that will proceed only if the business rate supplement is agreed, has been modelled on the basis of a £50,000 threshold and the Mayor of London says that the passage of the Bill on that basis is fundamental to funding Crossrail. I hope, therefore, that Opposition Members will be practical when they consider how to vote on the clause and that they will not press an alternative figure, which could only undermine the viability of—

Bob Neill (Conservative, Bromley and Chislehurst)

Does the right hon. Gentleman not recognise that there is an inherent contradiction in what he says? He says that the passage of the Bill is fundamental because Crossrail is modelled on a £50,000 threshold, but the £50,000 never appears in the Bill. What it is predicated upon is the use of the regulation. It is a matter of whether the Minister feels that it is appropriate to use the flexibility of the regulation to have a different starting point in a different part of the world to deal with that issue.

Nick Raynsford (Labour, Greenwich and Woolwich)

That is a good try, but when the hon. Gentleman looks at Hansard he will recognise that I referred to the modelling that has been done by the Crossrail team, under the overall tutelage of the Mayor of London, which is based on the assumption of a levy with a threshold of £50,000. That is the basis, and I am urging Opposition Members to be realistic and practical in their approach and to recognise that the one scheme that we know is dependent upon the business rate supplement will not proceed if their flights of fancy about alternative thresholds are pursued.

John Healey (Labour, Wentworth)

This is an important part of how a business rate supplement may work and therefore requires the sort of serious consideration given by the Committee this afternoon. It is good to see a contribution from all the Opposition Members on the issue, and I quite understand why.

Amendment 16, tabled by the hon. Member for North Cornwall, would put the £50,000 rateable value threshold in the Bill, rather than setting it in secondary legislation, as currently drafted. When I saw the amendment I was puzzled. Apart from providing the basis of a debate such as this, I could not see why he would want to press the amendment into primary legislation. In his opening remarks, he said that it was because he wanted to ensure that business had a greater certainty about the threshold. The exchange that we just heard between my right hon. Friend the Member for Greenwich and Woolwich and the hon. Member for Bromley and Chislehurst on the Opposition Front Bench also underlines the importance of certainty for any potential levying authority in being able to model a potential yield from BRS as a possible contribution towards larger project funding. For that reason, back in the October 2007 White Paper, we said that we intended to set the threshold at £50,000. The Committee knows that I have been consistent about that ever since. To use the words of the hon. Member for Bromley and Chislehurst, we have signalled up the £50,000 threshold since that time, and we were right to do so.

I have three points to make. First, in response to the question of when we confirm the threshold value, we did that back in October 2007, for those reasons. The second question, which the Committee has been chewing away at, is whether £50,000 is the right level. The third is the one that the amendment deals with, which is whether the threshold value should be in primary legislation or whether we should have the flexibility to deal with it in secondary legislation. To be fair, the amendment would put it in the Bill but retain the flexibility of subsequent amendment by regulation, which sort of undermines the case for introducing it in the first place.

Having dealt with the importance of consistency and certainty—the reason why we announced our intent to set the threshold at £50,000 early, and our continued intent to do so—I turn to the question of the £50,000. It is, in the end, a judgment, based on a number of factors. The critical factor is the extent to which a potential business rate supplement, even with safeguards such as the 2p limit, would place a burden on business, and the extent to which we can deal with that through a threshold—one that would nevertheless give the levying authority the sort of yield that makes the BRS worth while.

Our assessment of business rates and the size of business suggests that the proportion of costs for businesses with a turnover of about £100,000 is significantly greater than for bigger firms. We are concerned about small firms. For those with a turnover of between £500,000 and £1.9 million a year, business rates as a proportion of their costs generally tail off significantly. That is particularly so for firms with a turnover of more than £1.9 million.

I accept that those figures will not be precise in all circumstances; I am giving the Committee an indication of the sort of analysis and modelling that led us to our decision on the figure of £50,000. Businesses with a rateable value of more than £50,000 will, on average, have a turnover of £1.9 million or more. It is logical. The larger the company, the more likely it is to have premises with a higher rateable value; the larger the turnover—the larger the company—the smaller will be the relative proportion of the business costs, of which business rates form part.

The rest of the debate is in Hansard.