| Public Bill Committee |
| Tuesday, 20 January 2009 15:54 |
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Q 258 Mr. Khan: The LGA is in favour of Crossrail and also in favour, in general terms, of the Bill—is that correct? Councillor Knight: Yes. Q 259 Mr. Khan: I have a couple of questions but, first, some generalisations. You would say that most local authorities have good relations with local businesses. Councillor Ross: Yes, as a generality. Q 260 Mr. Khan: And as a caricature or a generalisation, you would say that perhaps that during localisation in the ’70s and ’80s—the utopia that Mark so enjoys—the relationship was not so good. Councillor Ross: That was when I was in business and not a councillor. You are absolutely right. Councillor Knight: The nature of the interaction between local businesses and local authorities has changed as a result of local authorities no longer setting the business rate. As you might expect, the relationship is therefore different. Q 261 Mr. Khan: Excellent. What would you say to the school of thought that the only way that businesses can be consulted properly is via a ballot? Councillor Knight: I do not agree with that at all. Just as central Government do not hold a ballot for setting corporation tax it is not necessary for local government Column number: 70to hold ballots for setting local tax. We are democratically accountable politicians: we stand on a manifesto, we are accountable to the community more generally through the ballot and we have a responsibility for maintaining thriving communities. Q 262 Mr. Khan: In your submission, you say that you are against the obligation always to have a ballot on a BRS; you want the discretion, which we will discuss in a second. Tell me your views on the requirements for ballots on BIDs. Why do you have different points of view, if you do, on BRS and on BIDs? Councillor Knight: I am not sure that I do, but I am probably not in a good position to talk to you about the BIDs process because I am not an expert on how it works. Councillor Ross: Neither am I, but it would surprise me if there were a ballot for BIDs. Mr. Khan: There is—it is compulsory. Councillor Ross: What I know about BIDs is that local authorities that have gone down the BID route have welcomed it as a way of improving their areas. My neighbouring authority, Kingston upon Thames, has a BID, which was probably one of the first in the country. It has clearly worked well and has a lot of support. I think that local government would say more generally that a BID is a very restrictive way of getting funding for work on developing town centres and businesses. In an ideal world we would like much more flexibility, to work more flexibly with businesses and to have more control over business rates in order to have more powers in that area. Q 263 Mr. Khan: Some witnesses today have said they want ballots all the time. Do you want ballots none of the time? Councillor Knight: It should be up to local authorities to decide whether they want to hold a ballot, be it an indicative ballot or a deciding one. Q 264 Mr. Khan: You and the other witnesses today are almost at two extremes. What are your views on the maximum level of income that can be derived? Do you favour a 4p limit? Councillor Knight: I think that we accept that. Lyons said that 4p ought to be the upper limit. Ideally, we would say that there should not be a limit, but that it should be a matter for local authorities, which, working with local businesses, are best placed to decide the appropriate amount to best support their local economy. Q 265 Mr. Khan: So, is it fair to say that the proposal in this Bill—not a ballot never, nor a ballot all the time, but a ballot when certain hurdles have been overcome—is a middle way between the two polarised views? Is that a fair summary? Councillor Ross: Should not there just be a full consultation with business? If business wants to get involved, it will get on board, and if it does not want to get involved, it will not. You could weigh up the number of businesses, I suppose, so you would have an informal ballot in that sense. Column number: 71 Q 266 Mr. Khan: There is statutory consultation in the Bill, which I am sure you have read. Councillor Ross: Yes. Q 267 Mr. Khan: Great. So you welcome that. Councillor Ross: Yes. Q 268 Mr. Khan: Finally, on the discretion that you talk about for local authorities, you will of course be aware that it is possible, in the prospectus—in the consultation that Councillor Ross wants—for there to be flexibility for local authorities in relation to the funding that local businesses give. That flexibility is there. Councillor Knight: Our argument is that there should be the maximum flexibility for local authorities to respond to local needs. Our main problem with the Bill as it stands at the moment is that there is far too much prescription in terms of what the limits should be, and so on. Q 269 Mr. Khan: The previous witnesses, whom you may not have heard, wanted even more prescription. Councillor Knight: Indeed. Q 270 Mr. Khan: You want even more flexibility. I shall repeat my question. Do you think that the business rate process offered in the Bill as it is written now provides a sort of the middle way between the two extremes? Mr. Love: A good compromise. Mr. Khan: Indeed. Councillor Ross: If I may, I think that hard-wiring 2p on the face of the Bill is probably not the way forward. There should be flexibility in the Bill for regulation. That then becomes part of the businesses’ decision. If they want to contribute more to a scheme, then they would. Q 271 Mr. Khan: And they can do so. Councillor Ross: They can, yes. What? In the Bill? Q 272 Mr. Khan: If you are a businessman you can make a contribution. Councillor Ross: You can put as much as you like in, yes. Q 273 Mr. Khan: Mayor Johnson would be grateful to receive that, I am sure. Councillor Ross: Or as little as you like—actually, no, that would be a minimum, too, wouldn’t it? So there is no flexibility in the Bill. Mr. Khan: Thank you. Q 274Robert Neill: The Under-Secretary of State can read my mind. I can see him setting himself up as the apostle of the moderate way through the middle on this. Have you, on behalf of the LGA, or your officers carried out any survey of how many local authorities within the LGA membership would wish to exercise these powers and on what sort of projects? Column number: 72 Councillor Ross: We understand that, at the moment, no local authority is hungry for these powers. It is a very difficult time anyway. Q 275Robert Neill: Indeed, we have a submission from the Mayor of London and, again, he limits it purely to Crossrail. I understand where you are coming from in desiring greater local flexibility, going back to Lyons, and so on. Following the logic of that, if you have power to raise a supplement, should not there also be a power to make a reduction in the business rate if you thought that that was appropriate for local circumstances? Councillor Ross: Absolutely. Councillor Knight: Yes, we would support that. Q 276 Mr. Raynsford: The questioning that you have heard will have made it absolutely clear that what we are hearing from you is diametrically opposed to the message that we have been hearing most of the day from most of the representatives of business, who gave—if I can just simplify it and, hopefully, not exaggerate it—grudging acceptance to the Bill’s provisions as a mechanism for funding Crossrail, but were otherwise deeply suspicious of local authorities using this essentially as a means of tapping business for more funds. What are you going to do to try to overcome what is, to be frank, a dialogue of the deaf? Both of you say you think the two parties have a good relationship, but that is clearly far from the reality. It is an extraordinary experience for us to hear completely different points of view coming from the two sides. Councillor Knight: I think that, at local level, we do have a good dialogue and a good relationship with our local businesses. The local strategic partnerships provide a platform for that and, in most areas, they work well. It is always difficult for businesses to strike a balance where they can see an extra levy or tax hitting their bottom line and they do not necessarily know at the outset what the benefit is going to be. As politicians all know, it is rare that anybody will volunteer for extra taxes, although everybody wants the extra benefits that come from them. You are probably seeing that happen today at the level of businesses. Local authorities and government are best placed to think of the long-term economic benefits for their community of particular investment in needs, whereas businesses and the market are good at looking at short-term gain, and, as we know from the current economic climate, not so good at planning for the long term. There are always public goods which elementary micro-economics would tell us the market would never provide. We are saying that local government needs powers to provide public goods for the local economy which the market may not voluntarily provide, but which are in the best interests of communities. Q 277 Mr. Raynsford: I hear that argument. Lyons heard it and came forward with a proposal that formed the basis of the Bill, which you described in your opening remarks as a step in the right direction but which has unleashed a very hostile response from the overwhelming majority of the representatives of the business community who have given evidence to us. The clear message is that the LGA has a job to do by way of Column number: 73a charm offensive to win the case for the ability to do positive things for the local economy. I would have thought that it ought to be receiving a more positive response from business than it is. Councillor Ross: Perhaps we would have a better relationship with business if we were given the power to raise the whole of the business rate ourselves. Mr. Raynsford: Not on the basis of what they said to us earlier today. Councillor Ross: They have probably forgotten the experience, but I think that there is a case for working with them and setting a rate to fund all the infrastructure activity through that process. Q 278 Mr. Raynsford: Not a single representative of the business community has given evidence that they would support that, any more than they would support your proposals to give district councils or London boroughs the power to do it, to abolish the 2p limit and allow a higher figure, or to leave ballots entirely to the discretion of local authorities. Frankly, those proposals are for the birds, as far as the business community is concerned. The situation is that two polarised views are being expressed to us. Councillor Knight: Were a local authority to come forward with a proposal on a supplementary business rate, no doubt local businesses would be involved in a lively public debate in the locality about the potential impact on businesses, the benefits of the proposed scheme and so on. Our submission is that that debate should happen locally around the scheme among the local people who will, first, be paying for it, and, secondly, be benefiting from it. As the representatives of the community, local authorities are best placed to make such decisions. We are no strangers to difficult, contentious local issues. We all take contentious, difficult decisions in the interests of our local community. Sometimes very strong vested interests argue one way or another, and we have to balance competing demands. We do that day in, day out. Upper-tier authorities in this country manage multi-billion pound budgets and take tough decisions. It is no surprise to us when issues are contentious or difficult. We are used to dealing with them, and sometimes the right decision for the long-term benefit of an area’s economy will not be popular with everybody in the short term. Q 279 Mr. Raynsford: I hear all of that, and I am sympathetic to it, but you really have a big job to do to convince the business community of it. This is my final question, and it is probably slightly unfair— Councillor Ross: Before you ask it, could I carry on with that answer? Perhaps the focus in the Bill is wrong. It is more on the supplementary rate than on the scheme. Perhaps you should look at the scheme—obviously, there has to be a scheme first—before you bring in the business rate supplement. |
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