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Business Rate Supplements Bill

My Lords, I support this amendment and endorse the remarks so ably made by the noble Baroness, Lady Hamwee. I want to put on record our thanks to the noble Baroness, Lady Andrews, for the way in which she has conducted the negotiations and discussion, trying to keep us informed throughout this process. We have appreciated it and it has helped enormously, even if we have not always been able to agree. In that respect, I welcome the noble Lord, Lord Davies, to this part of the debate. We start with an issue which has been rightly identified as one of principle. The objective of the Business Rates Supplements Bill, we are led to believe, is to encourage a genuine partnership between business and local authorities. How can there be a genuine partnership if one argument is that business has a veto and the other is that local authorities have a veto about consulting with local businesses? The noble Baroness, Lady Hamwee, has already referred to a particularly interesting exchange in Committee when the noble Baroness, Lady Andrews, asked noble Lords to think about whether it would be right, democratic or fair to consult with businesses. That seems in many ways to give away the myth of what is going on here. What has been proposed is not really a partnership but a tax. Therefore, there is no desire to involve businesses in the decision. There is a problem with the notion of the threshold: where the proposal for a business rates supplement exceeds one-third of the total cost being put forward, that gives rise to a ballot. That leaves it open, given that there is such an arbitrary strike of where that boundary should fall, for local authorities to so manage their affairs in putting forward these proposals that a ballot does not actually take place. The simple way of starting off on the right footing towards making this a genuine partnership is to say that business involvement is essential from the outset. After all, if the objective of the business rate supplement is to promote economic regeneration, surely businesses will have nothing to fear from a referendum. All businesses will benefit from it. That is why business improvement districts work: because the people with a clear vested interest in an improvement in their area attracting more customers, more trade, must be totally signed up and committed. If the business rate supplement is genuinely additional, for economic regeneration in an area, and is crafted in a way focused on the needs of business, when business is invited to contribute to it, most businesses will want to support it. Therefore, why not test that opinion from the outset? The other benefit has been identified by the CBI in its helpful briefing on the clause. It states that it would deliver an improved relationship between local government and business from the outset—a point already made—and that it would mean better investment decisions, because businesses’ experience would mean that only projects with demonstrable benefits to local economies would proceed. Again, that is a very important and valuable point. It would also enable levying authorities to have greater flexibility, because business communities are likely to accept greater flexibility in the knowledge that they will really be able to influence the final outcome. That is only fair when it will lead to firms paying higher taxes for projects—above and beyond what they already pay. The CBI states that that is not a business veto but a judgment about whether businesses actually expect to see value for money when they pay more tax in order to support a project. We very much support those sentiments on behalf of business. If the Government were to accept a compulsory ballot, that would be a clear way to settle down some of the sceptics about the Bill, because it would clearly state that it is a genuine partnership between business and the local community for the benefit of all concerned. My final point relates to the size of business involved. We are not talking about a ballot that involves hundreds of thousands of businesses in a local area. The threshold proposed is of a rateable value of £50,000. I am sure that the figures for central London will be higher, but outside London, that points to an office or retail space of between 3,500 and 4,000 square feet. There could be 35 to 40 people in there. In a given area, there will be relatively few of those businesses, but they will be a significant part of that local community and the local economy. The notion that they may somehow be excluded from decision-making and discussion—having a voice—on something to which they may be asked to contribute and which is notionally presented as for their benefit is unacceptable. I am therefore very happy to support the amendment and hope that it is secured.