Third Standing Committee on Delegated Legislation
Monday 13 September 2004
[Sir John Butterfill in the Chair]
Draft Business Improvement Districts (England) Regulations 2004
4.30 pm
The Parliamentary Under-Secretary of State, Office of the Deputy Prime Minister (Phil Hope): I beg to move,
That the Committee has considered the draft Business Improvement Districts (England) Regulations 2004.
It is a pleasure to be in Committee; I think that this is the first time that I have served under your chairmanship, Sir John. I am looking forward to working through what I think is an excellent proposal.
The Business Improvement Districts (England) Regulations are to be made under section 150 of the Local Government and Housing Act 1989 and part 4 of the Local Government Act 2003. They provide for the setting up and operation of business improvement districts—or BIDs, as they are now widely known.
Three members of the Committee—I am not sure whether they are all here—have been involved in the scheme to date through the BID pilots. They are the hon. Member for Kingston and Surbiton (Mr. Davey) and my hon. Friends the Members for Manchester, Central (Tony Lloyd), and for Plymouth, Sutton (Linda Gilroy). We are also privileged to have on the Committee the chairman of the national BID pilot steering group, my hon. Friend the Member for Brighton, Pavilion (Mr. Lepper). There is expertise on the Committee: there are hon. Members here with great experience, who will, I hope, join me in welcoming the regulations.
Under the scheme, local authorities and businesses would be encouraged to work together for the benefit of their community. Projects under the scheme could include a wide range of different measures for improving the places where people work and live. That might involve increasing security or cleanliness, improving public access and the street environment, or enhancing or promoting the town centre or business area in some other way.
The improvements would be funded by a levy raised on the non-domestic ratepayers, or a defined class of those ratepayers, in the area covered by the scheme. However, before any proposal went ahead, the businesses concerned would have the opportunity to vote in a ballot. To go ahead, schemes must be supported by more than 50 per cent. of the local businesses balloted; the percentage must relate to both total numbers and rateable value. That double requirement protects the interests of small and large businesses in the area.
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There has been widespread interest in the scheme and enthusiasm for the opportunities that it offers. Much energy and commitment has gone into ensuring that BIDs are a success. As I mentioned, several pilots have been set up to develop proposals to the point of a ballot. The pilots are of different sizes and types and are in many different locations, but they have shown the great potential of the scheme to improve a local business environment and people's everyday lives.
I take this opportunity to thank the Association of Town Centre Management for establishing 22 pilot schemes across the country; the circle initiative for piloting the concept in five areas of central London; and the partners in the other independent schemes for taking forward ideas to transform their areas—particularly those involved in the Kingston project.
There have been concerns that the scheme has taken a long time to come into effect, and that we are in danger of losing momentum. The level of enthusiasm and energy generated by the proposed scheme has been encouraging, but that would quickly dissipate if the mechanisms for putting it into effect were flawed. It was therefore very important to us to consult fully about the proposals; we made sure that the regulations before the Committee today were workable and robust.
Inevitably, some aspects of such a new and innovative scheme proved more complex to set up than was originally anticipated. Some needed more clarity to be effective. Most of the pilot schemes have not yet quite reached the ballot stage, but I hope that those that are ready will not need to wait much longer. I understand the frustration about this, but it is in the long-term interests of the scheme to get the detail right from the start.
Hon. Members will recall that we discussed at length, during the Local Government Act 2003 debate about the scheme, whether property owners as well as occupiers should be entitled to vote. You will be glad to know, Sir John, that I do not intend to revisit those discussions this afternoon, but there is nothing to prevent property owners from making voluntary contributions to the scheme. Indeed, we would encourage that. Given the concerns that have been raised, we have also undertaken to conduct research into the role of property owners in BIDs, and we hope to have appointed a research body to take that forward by the end of next month.
I know, too, that there have been concerns about the level of information on the proposal provided at the ballot stage to those businesses that are entitled to vote. I should make it clear that anyone liable for the BID levy is entitled to receive a copy of the BID proposal and the proposed business plan if they ask for a copy. There is provision in the regulations for that. However, at the heart of the scheme is a partnership approach. We expect discussion and consultation among businesses in the area to take place at an early stage in the development of the proposals. We would expect those discussions to continue as proposals emerge and change over time. The details of the proposal will be familiar to all those entitled to vote well before the formal ballot takes place.
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It is right that protections are built into the regulations. If some businesses feel that there is a material irregularity in the ballot, they can ask the Secretary of State to declare the ballot void and order a re-ballot. If businesses or the BID proposers feel that the billing authority is acting unreasonably in vetoing the proposal, they can appeal against the veto. The appeal would take account of both the billing authority's published policies and whether proper consultation took place before the proposal was put forward to a ballot.
Overall, the scheme offers a real opportunity for business and local government to work together to deliver improvements that bring benefits to both the partners and, most importantly, to people in their local area. Those benefits are genuinely additional to what local government or local business can provide individually.
The regulations are fair and clear, and contain the right checks and balances, while encouraging innovation and productive local partnerships. The incentives are there to deliver practical benefits and economic growth through local government working with local business. I commend the draft regulations to the Committee.
4.37 pm
Mr. Robert Syms (Poole) (Con): It is a pleasure to see a fellow Dorset Member chairing such an important Committee, Sir John.
I had the honour of serving on the Committee that considered the Local Government Bill, which dealt with the proposals. My memory of those debates is of Ministers giving reassurances that everything would be dealt with by regulation. We are sceptical and have concerns about how things would operate. Having looked through the detailed information that we have been given, however, I can see that many of our concerns have been dealt with by regulation.
There is of course a general concern about loading additional burdens on business. With congestion charging in London and such proposals as those that we are discussing, doing business in some of our city centres could become very expensive indeed. The devil is in the detail, however, and we would want to watch carefully how the first scheme was set up and operated. Such schemes have operated abroad, and in some cases they have been successful, but in others less so.
A business case has to be put prior to a ballot. Will it become clear to those who have to vote exactly what they will have to pay before they vote? If not, my main concern is that people might vote on a false premise and find that by the time the final details are worked out the costs are substantially more. We all know in life that, when one makes a proposal, sometimes the costs are not exactly as one undertakes. I would like to know how much detail will go into a business case before people have a ballot.
I am greatly assured by the fact that the voting is done not only per head, but on rateable value. There is protection to stop small business people from outvoting a large payer, and things are covered from both sides of the equation. However, what would
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happen to the loss of revenue when, for example, an extremely large payer of business rate went bust in the course of a scheme that ran for several years? How would one deal with that? Would there be a supplementary levy? Would the scheme have to undergo another ballot? What would happen if the BID's financial base changed? Moreover, what would happen in the case of business revaluation, which sometimes changes liabilities and what businesses have to pay in a particular area?
Overall, I am sceptical, but the Conservatives will watch carefully to see how these schemes work. I am reassured by many of the conditions in the very detailed regulations. I accept that certain things would work very well—the Minister mentioned security—and we all know of areas where, either because of lots of nightclubs or concern about terrorism, a levy on business for closed-circuit television or security people to cover it might be legitimate. We do, however, have concerns about the costs to business. We know that, over a period of years, the Government have taken a lot more out of the business community in bureaucracy and tax, so we have concerns because, at the end of the day, members of the business community are the people who create the jobs.
4.41 pm
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