Business Rate Supplements Bill

My Lords, I am grateful to the noble Baroness for giving us notice of the intent behind the amendments, as that makes it easier for us to be, I hope, very specific in our responses. This is a large group of amendments that deal with points of detail. If I am not able today to answer them simply, clearly and fully, I will certainly follow up in correspondence, but I hope to meet the noble Baroness’s expectations. As I said when we dealt with the amendment tabled by the noble Lord, Lord Jenkin of Roding, the Government will consult fully before implementing Schedule 2 to the Bill. Schedule 2 gives a valuable degree of flexibility, which many stakeholders have asked for. Of course, with flexibility comes the possibility of implementing the schedule in different ways. In due course, all stakeholders will be given the chance to comment in full on the Government’s proposals for implementation, as will Parliament when the necessary regulations come here for debate. I hope that that puts in a useful context the answers to the noble Baroness’s detailed questions. On Amendment 5, the noble Baroness wishes to know how paragraph 2(2) of Schedule 2 applies where a BID is being renewed. The short answer is that it does not. It may be useful if I take a step back to explain why. Schedule 2 will apply where there is both a BRS and a BID in an area, but it need not be the case that either is already in force. All that is necessary for steps to be taken to establish a BRS BID is that a BID has been approved in a ballot for an area and that the final prospectus for a BRS for the area has been published. As a minimum, both the BID and the BRS must have been approved to come into force on some future date, but they need not actually have come into force. That is the combined effect of paragraphs 1 and 2(2) of Schedule 2. Where a BID is already in force and up for renewal, paragraph 2(2) will have no direct application. The BID will be in force and steps can be taken to establish a BRS BID, provided that there is a BRS for the area. If BID renewal proposals are ultimately unsuccessful, the BRS BID will have to come to an end, because there cannot be a BRS BID without a BID being in existence. However, if the BID is renewed, the BRS BID will be able to continue. The BRS BID proposals will have to allow for both these prospects. The maximum lifespan of a BRS BID will be five years, as is the case for BIDs, and the expiry date for a BID and BRS BID in an area will be the same only if they come into effect on the same day, which will not necessarily be the case. The noble Baroness asked whether paragraph 2(5) of Schedule 2 affects local discretion to offset BID liabilities against BRS liabilities. It does not. While BRS BIDs can be introduced only in those areas where a BRS is in place, a BRS BID will not affect owners’ or occupiers’ BRS liability. A BRS BID might be established so that the BID liability of occupiers can be offset by a contribution from property owners through the BRS BID, but the BRS BID provision is separate and distinct from the flexibility that levying authorities have to offset BID liabilities against BRS liability that is provided for in Clause 16. Subsections (1) to (4) of Clause 16 provide the BRS-levying authority with powers to offset BID levies against BRS liability, which can be done irrespective of whether a BRS BID is in place. Where a BRS BID is in place, the levying authority has the discretion to offset that liability against BRS liability for anyone who is liable for both levies. That is dealt with in Clause 16(5). The levying authority will need to set out in its prospectus its policy on offsetting BID liability and BRS BID liability against BRS. This policy will have to cover BIDs in existence when the BRS is established, as well as future BIDs and BRS BIDs. Once the authority has done that, BID companies will be able to consider whether a BRS BID for their area might be appropriate and whether property owner contributions might take the place of some or all of the contributions from occupiers who are also liable to BRS. The noble Baroness, Lady Hamwee, queried whether a rateable value is doubled if both occupiers and owners vote. This contemplates ballots for a BID as well as a BRS BID. The answer will depend on how the ballots for the BID and BRS BID in an area are run. Schedule 2 to the Bill gives the Secretary of State the power to deal with this in regulations, on which we will be consulting, but the Bill contemplates that ballots might be conjoined, held simultaneously but separately, or held at different times. The Bill also gives the Secretary of State the power, in paragraph 5 of Schedule 2, to deal with how rateable value is attributed to a property owner for the purposes of BRS BIDs. That reflects the practical reality that property owners may own property that does not individually have a rateable value ascribed to it. Office blocks, for example, might comprise several rateable properties and, therefore, several rateable values, but the whole building might not have a rateable value. In those circumstances, one answer might be to aggregate the individual rateable values and ascribe those to the owner for the purposes of BRS BID ballots. On the specific question, depending on the approach taken, it might be the case that, in a combined ballot where both the occupier and owner of a property vote, the rateable value of that property is effectively doubled, but that will reflect the fact that there are two persons voting in respect of that property. In separate ballots on a BID and BRS BID, that will not happen; when it is conjoined, that will not be the case. The noble Baroness doubted whether it was proper for BRS BID proposers to be able to cherry pick between provisions that might be made under paragraphs 6(2)(a) and 6(2)(b) of Schedule 2. Paragraph 6(2) flows from discussions between the Government and stakeholders in advance of Schedule 2 to the Bill being tabled. We were told that it would be valuable for those proposing a BRS to be able to consider how the results of combined ballots on a BID and a BRS BID might be assessed based on the proposals that they are making. I can understand that the idea of those proposing a BRS BID cherry picking the counting mechanism could give cause for alarm; it potentially looks like carte blanche for those proposing the ballot to rig the result. But I can assure noble Lords that that is not what we are providing for. Paragraph 6 simply acknowledges that, in combined ballots, there might be cases where a degree of interdependence is appropriate between the votes of occupiers and the votes of owners before a BRS BID can be established; in others, even though the ballot is combined, it should be enough that the BRS BID vote is successful on its own. The Government recognise that there will be different views on this and that the issue has the potential to be complicated. That is why we have taken the power to make provision of the type contemplated in paragraph 6 of Schedule 2 in regulations, subject to the affirmative resolution procedure and why, as I mentioned, we will be consulting fully. Amendment 9 relates to the possibility of weighting occupiers’ and owners’ votes in a combined BID and BRS BID ballot. Paragraph 6(4) is in addition to the double-lock ballot arrangements and follows on from the Government’s discussions with BID stakeholders and the British Property Federation at earlier stages of the Bill. As I mentioned, in some cases a BRS BID will be set up so that the contributions from property owners to a BID-funded project can offset the contributions to that project from occupiers who are also paying a BRS. In other cases, occupiers and property owners will fund the same project for their area, through a BID and BRS BID respectively, although the BRS BID will not provide any offset as such. In both these cases, occupiers and property owners will be contributing a proportion of the funding to the same project. Those proportions may be equal—50:50—or they may not and owners will contribute, say, 25 per cent of the project costs. In those cases, stakeholders have told us that there should be flexibility for the ballots on the BID and BRS BID to be conjoined and for the votes of occupiers and property owners to be weighted. Therefore, where they are funding equal proportions of the project, their votes would carry equal weight and, where they are not, their votes could be weighted by reference to the proportion of the project that their cohort is funding. Potentially, this would be for the person proposing the BRS BID to set out in their BRS BID proposal document. Clearly, however, different stakeholders will have different views on whether such a weighting should be possible and, if so, whether it should be for the BRS BID proposer to decide that weighting is appropriate for their proposals. This is one of the issues on which we will be consulting. I move on from ballots to Amendment 10. Paragraph 7 of Schedule 2 to the Bill gives the relevant billing authority the power to veto BRS BID proposals in circumstances set out by the Secretary of State and regulations. This mirrors the position of BIDs under Section 51 of the Local Government Act 2003. Subsections (4) and (6) of that provision require billing authorities that exercise a veto to notify all those who are entitled to vote in the ballot, informing them of the reasons for the veto and their right to appeal, and to notify the Secretary of State. Those requirements will also be imposed on billing authorities that seek to veto BRS BID proposals under paragraph 9 of Schedule 2 to the Bill. I acknowledge that the interaction between paragraphs 7 and 9 of Schedule 2 can cause confusion in this respect. Perhaps at this stage I should speak to Amendment 12, taking it out of turn, since it also relates to vetoes. The power of the Secretary of State in Section 52(2) of the Local Government Act 2003 to make provision in relation to appeals against billing authority vetoes of successful BIDs also applies in relation to BRS BIDs. The power in Section 52(2) has been applied to BRS BIDs by paragraph 10(e) of Schedule 2 to the Bill. Finally, on Amendment 11, the noble Baroness has queried the wording of paragraph 9(1) of Schedule 2. I hope that I can explain the reasons for the formulation that we have adopted. Paragraph 9(1) applies various provisions of Part 4 of the Local Government Act 2003 to BRS BIDs. Some of those provisions relate to the setting up of BIDs and some relate to what happens when a BID is in force. Similarly, in their application to BRS BIDs, some of the provisions will relate to the setting up of a BRS BID and some will relate to what happens when one has already been established. If I understand the noble Baroness correctly, she is concerned that we have not got the tense right in paragraph 9(1). I hope that, with that short explanation, I have persuaded her that we have and that there is no uncertainty in the drafting of Schedule 2. Each provision applied to BRS BIDs by paragraph 9(1) will apply to the appropriate stage in the BRS BID process, be that pre- or post-establishment of the BRS BID. I hope that I have answered all the points that the noble Baroness asked me to address. If not, I am happy to try again or to write to her. Since this may be my last chance to speak from the Dispatch Box on this piece of legislation, perhaps I might briefly comment that this Bill makes an important contribution not only to Crossrail but more widely, by enabling local government, in partnership with local businesses, to invest in the economic development of its local areas. I thank noble Lords for their knowledgeable debate and thorough scrutiny of the Bill. In particular, I thank the noble Lord, Lord Bates, and the noble Baroness, Lady Hamwee, for their work on the Bill. I am grateful to all noble Lords for the detailed and careful scrutiny that the Bill has been given. I am also grateful for the work of the Bill team. Special mention must be made of my noble friend Lady Andrews, who introduced the Bill to this House and saw it through Second Reading and the detailed scrutiny of Grand Committee. My noble friend Lady Andrews was characteristically thorough in her approach, giving a full explanation of the Bill and how the Government envisage that BRS will operate. That has no doubt helped me and my noble friend Lord Davies in the later stages of the Bill; I am very grateful to her. I also thank my noble friend Lord Davies, who, in the interim period between my noble friend Lady Andrews and me, led the debate on the Bill. I hope that that concludes matters from the government Benches, but I am happy to try again if necessary.