Business Improvement Districts Bill [H.L.] (Hansard, 27 March 1998)

HL Deb 27 March 1998 vol 587 cc1468-86 1468

§ 11.59 a.m.

§ Report received.

§ Clause 1 [Business Improvement District (Election) Orders]:

§ Lord Jenkin of Roding moved Amendment No. 1: Page 1 line 10, leave out subsection (2) and insert— ("(2) Subject to subsection (3) below, a local authority may make an election order for any area —

(a) which is wholly comprised within the area of the authority, and constitutes the whole or part of the area in which the establishment of a business improvement district is proposed; or
(b) in relation to which the authority are discharging the functions of another local authority as respects the establishment of a business improvement district.

(3) The applicant for an election order must he a ratepayer in respect of a hereditament within the area for which the election order is proposed.").

§ The noble Lord said: My Lords, in moving this amendment it may be for the convenience of the House if I speak to Amendment No. 23. I hope that the House will bear with me for a moment if 1 follow the example of the noble Baroness, Lady Farrington, at Committee stage when she craved the indulgence of the House to make a general point near the beginning of that stage (Hansard, 27/2/98; col. 886.). After some introductory remarks, she made two specific points, and I wish to refer to one of them. At col. 887 she said, It is clear that under the provisions of the Bill, businesses in an area will have to pay a certain amount if there has been a local vote to that effect. Although individual businesses will have the opportunity to vote, they will not have a choice on payment of the charge if the decision is taken to implement the draft scheme. As I am sure the Committee will recognise, this is exactly analogous to the taxation system in any democratic country. We can influence the level of income tax via the ballot, but there is no choice on whether or not to pay. This is, by definition, a tax and spending of the income received would count as public expenditure".

§ At the time I questioned that statement. Since then I have had the advantage of advice from some financial experts in this country. I have been able to study the European system of accounts to which the noble Baroness referred on that occasion. But perhaps most important, I have had the advantage of a meeting with the noble Baroness, for which I am immensely grateful. She was accompanied by a formidable group of officials not only from the DTI, but from the Treasury and from the Office of National Statistics.

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§ I believe that it would be fair to say that we did not attempt to resolve the issue as to whether a charge under this Bill is a tax and the spending of it would count as public expenditure. But I believe that we reached an understanding that, first, it would be right to proceed with the remaining stages of the Bill in this House (and we are here today to deal with the Report stage), secondly, that it would be for another place to take account of the argument perhaps by requiring a privilege Motion to be moved in the ordinary way; thirdly, that if expenditure by a BID company is indeed public expenditure that still leaves open the question as to whether it should be treated as part of what is called in the jargon "the control total"; and, fourthly, and perhaps most important of all, the Government's forthcoming consultation paper on the local government financial system, which we were told will include options for business rates, will certainly be germane and may well be directly relevant to the issue. So I do not intend to say any more about it at this stage, but to follow the understanding that the noble Baroness and I reached that we should proceed with the Bill.

§ I move straightaway to Amendment No. 1. A number of points were raised during Committee stage, many of which we have tried to meet with the amendments which I have tabled. The purpose of this amendment is to ensure that a local authority may make an election order where the area concerned is within its boundaries or outside those boundaries; where the authority is acting on behalf of another local authority; or—and this is the substantive change made by the amendment—where the authorities are acting jointly through, for example, a joint committee. That arrangement may be appropriate in some cases where, for example, there is a substantial area in two or more local authority areas and none of them wish to release the task of processing the business improvement district's application to the other. The amendment is intended to cater for the joint arrangements in such cases.

§ The new subsection retains the requirement that the applicant for an election order must be a ratepayer of the hereditament in the area in which the BID is being proposed. Since Committee stage I have had the advantage of visiting one or two areas which I was told would be wholly applicable to this Bill. I have heard of others. I believe that at Second Reading I mentioned the Park Royal estate in West London which is within the area of three different local authorities. So the amendment is intended to deal with a point that was raised. I beg to move.

§ Baroness Farrington of Ribbleton
My Lords, I am grateful for the further work that the noble Lord, Lord Jenkin of Roding, has undertaken to refine the Bill. I have no comments on this particular amendment although it appears to envisage separate orders for the different areas it mentions. However, in considering the amendments which have been laid today, the House may wish to have confirmed that discussions were held with the noble Lord following Committee stage. The Government's view that the charges imposed by a BID company would be treated as a tax and the income 1470 raised would count as public expenditure, as the noble Lord, Lord Jenkin, said, together with the fact that we are still awaiting the Government's paper on the review of local government finance, which I believe will be issued imminently, mean that we cannot give the Bill our support.
On Question, amendment agreed to.

§ Clause 2 [Application for election order]:

§ Lord Jenkin of Roding moved Amendment No. 2: Page 2, line 12, at end insert (", subject to subsection (4A) below,").

§ The noble Lord said: My Lords, in moving this amendment I shall also speak to Amendments Nos. 3 and 21. Amendment No. 2 is a paving amendment and the substantive amendment is Amendment No. 3, which inserts a new subsection into the clause.

§ The purpose of the new subsection (4A) is to deal with the situation where the maximum business improvement district charge proposed exceeds 5 per cent. It will be recalled that in Committee there was some debate about the desirability of allowing for that without requiring all the businesses paying BID charges to agree to the increase as the Bill provides at present.

§ However, there is a difficulty in allowing a proposal for a further increase beyond 5 per cent., on the basis of agreement by a majority of businesses, even with a majority of three-quarters of participating businesses, as the noble Baroness, Lady Hamwee, suggested in her amendment at Committee stage. Those businesses which had not been in favour of setting up the BID, but which were outvoted, would find themselves subject to additional charges without further scrutiny if the Bill was simply to provide that the percentage could be increased further once a bid was established.

§ Such an arrangement might also open the door to some indiscipline over the assessment of costs incurred when a scheme is put forward. So subsection (4A) allows for such an increase, but only where the application to set up a business improvement district is in fact for the continuation of an existing scheme. Adopting that mechanism ensures that the proposal is subjected to further scrutiny by the local authority and further representations from interested parties, as well as giving all the businesses concerned a vote as to whether a scheme should be confirmed on such a basis. It may be that where a scheme is seen to be successful and there is an impetus to continue it, a large majority of businesses will be receptive to the possibility of an increased charge. That is a prospect that ought to be assessed with the same level of protection which applies to initial applications.

§ The amendment to omit Clause 14 is tabled because the issue raised there is now being dealt with under the new subsection. I beg to move.

§ Baroness Farrington of Ribbleton
My Lords, while recognising the efforts made by the noble Lord to give BID companies, in proposing the continuation of a BID 1471 scheme, a greater degree of latitude in raising funds, noble Lords may wish to consider whether unlimited charges would be desirable.

§ Baroness Hamwee
My Lords, I recognise that the noble Lord, Lord Jenkin of Roding, has responded to a concern that I voiced in Committee. To a large extent, my amendment was probing and I was not persuaded by it, but I was concerned about how increases might be dealt with and whether appropriate and perhaps small increases could be prevented by a small number of chargepayers. I remain somewhat concerned because there seems to be no top limit to the amount of the increase.
We have heard from the Government that the Bill is fated to run up against the buffers, but that it will no doubt form part of the discussions when your Lordships are considering business rates in the context of the forthcoming Green Paper. I think that there is still some mileage to go in how one deals with possible increases, but I recognise the efforts which the noble Lord has made to deal with this point.

§ Lord Jenkin of Roding
My Lords, with the leave of the House, perhaps I may respond. I am well aware that there are certain obstacles in the way of the Bill making a great deal of progress in another place. Nevertheless, as I said at Second Reading, the idea of a business improvement district (with some mechanism for requiring all business ratepayers within the area to pay if a two-thirds majority support the Bill) has attracted much interest and there is now a good deal more steam behind the idea.
Earlier this week, a number of us in an all-party group concerned with London listened to a fascinating talk on the subject of London theatres and some of their problems. We were interested to learn that London theatres very much support a BID on the lines of what happens in New York as a means of increasing the attractiveness of the theatre area to patrons. I was up in Walsall last week where strenuous efforts are being made by the East Mercia Chamber of Commerce, with the support of the local authority, to upgrade some of the rather run-down industrial areas near the railway and canal, with some exciting projects. They, too, would very much welcome the Bill.
That is why I make no excuse for pressing ahead, while recognising that the scheme may have to wait for another piece of legislation. In the mean time, the amendment offers a way ahead if the Bill makes progress. There will no doubt be other opportunities to look at the detailed points which have been raised by the two noble Baronesses. I commend the amendment to the House.

Lord Bowness
My Lords, my noble friend's amendment addresses a problem to which we referred in Committee. If a business improvement district has been established and if unanimity were required for its continuation, some very good work might come to an end in short time. If I understand the amendment correctly, it seems that an application for an extension is subject to the same vote as an original application 1472 and, therefore, requires the same majority of business ratepayers to be in favour. In that respect, I am content to support the amendment.

§ Baroness Hamwee
My Lords, with the leave of the House, I am sorry if the noble Lord, Lord Jenkin, misunderstood me. My comments were directed to this amendment, not to the principle. My concern was about the apparent lack of a cap—although perhaps I am the last person in this Chamber who should be calling for a cap—to the total of the business charge as incorporated in this amendment.
On Question, amendment agreed to.

§ Lord Jenkin of Roding moved Amendment No. 3: Page 2. line 29, at end insert— ("(4A1 Where an application under this section is for the continuation of a business improvement district scheme, or for the continuation of a scheme subject to such modifications as may be proposed in the draft scheme accompanying the application, the maximum annual business improvement district charge proposed under the draft scheme may exceed 5 per centum and shall be the figure proposed by the applicant.").

§ On Question, amendment agreed to.

§ 12.15 p.m.

§ Lord Jenkin of Roding moved Amendment No. 4: Page 1 line 37, leave out ("3(1) and (2)") and insert ("3").

§ The noble Lord said: My Lords, in moving Amendment No. 4, I should like to discuss also Amendments Nos. 5, 6, 7 and 10. Amendment No. 5, which seeks to insert new Clause 3, makes it clear that in considering an application for a BID a local authority should have regard to interested persons generally, quite apart from the specific attention to be paid to the representations of the interested parties which are mentioned specifically in paragraphs (a) to (e). The interests which are to be given specific consideration by the local authority have also been broadened to include—at paragraph (b)—businesses located outside the area of the proposed BID but which would be affected by it, and any interested public authority, which we call a "relevant authority", which we seek to define in Clause 30 by means of Amendment No. 27, which we are also considering with this group, as I should have made clear earlier.

§ The reason for employing that term may need some explanation. As defined, "local authority" means a billing authority, and will generally be a district authority, a London borough or the City of London Corporation. That is natural enough because the applicants for BID schemes ought naturally to be the authorities which keep non-domestic rating lists—and they are the billing authorities. They do not include such authorities as county councils and police authorities, all of which may provide services or undertake initiatives in the area of a proposed BID. They therefore could be said to have a particular interest in an application, and it seems right that those areas should be given particular consideration along with the other categories referred to in the clause. Therefore, the definition of "relevant authority" used in the Bill is the same as that in Part V of the Local Government and Housing Act 1989. 1473 That is the definition deployed for the purposes of revenue accounts and capital financing of local authorities. It seems to me to be the most appropriate definition to catch the appropriate authorities consistent with keeping the notification process within reasonable bounds.

§ The amendment has been tabled in response to specific criticisms made in Committee and I hope that the House will feel that it meets the case. I beg to move.

§ Baroness Farrington of Ribbleton
My Lords, I note and welcome the work carried out by the noble Lord to clarify and widen the scope of the representations that can be submitted to the local authority as part of its consideration of a draft BID scheme. A concern remains that the clause, as amended, would mean that the Bill contains no reference to the timescale for making such representations. Does the noble Lord propose to deal with that at a later stage?

§ Lord Jenkin of Roding
My Lords, with the leave of the House, I would hope that any such details might be most appropriately dealt with in another place. If we have to embark on yet further amendments at Third Reading, I can conceive of there being some procedural difficulties. I thoroughly take the Minister's point, but I would much prefer to leave such matters for proceedings in another place. However, I hope that this amendment can he accepted and I commend it to the House.
On Question, amendment agreed to.

§ Clause 3 [Consideration of application]:

§ Lord Jenkin of Roding moved Amendment No. 5: Leave out Clause 3 and insert the following new clause— CONSIDERATION OF APPLICATION (". In considering a draft scheme a local authority shall have regard to such representations as may be made by interested persons, and in particular by—

(a) any ratepayer in respect of a hereditament within the area specified in the draft scheme;
(b) any ratepayer in respect of a hereditament not within the area specified in the draft scheme but which is affected by the improvements which are proposed by it;
(c) any other person in respect of such a hereditament, being a person having an interest in that hereditament in any capacity;
(d) any person who is either resident within the area specified in the draft scheme, or is not so resident but is affected by the improvements which are proposed by it; and
(e) any relevant authority.").

§ On Question, amendment agreed to.

§ Clause 4 [Making of election order]:

§ Lord Jenkin of Roding moved Amendments Nos. 6 and 7: Page 3, line 13, leave out from beginning to third ("the"). Page 3, line 14, leave out ("within that period").

§ On Question, amendments agreed to.

§ Lord Jenkin of Roding moved Amendment No. 8: Page 3, line 31, after ("above") insert ("and any determination the authority propose to make under subsection (6) below").

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§ The noble Lord said: My Lords, I beg to move Amendment No, 8 and speak also to Amendments Nos. 11 and 12. Amendments Nos. 8 and 12 which are linked deal with the potential exclusion of small businesses from liability to business improvement district charges. This was one of the major topics of discussion at Committee stage in relation to an amendment moved by the noble Baroness, Lady Hamwee. The desirability of providing some mechanism for excluding such small firms from liability was in general accepted. The mechanism is not however a straightforward one. Simply to provide, as one might have done, a minimum rateable value below which businesses would not be liable to pay BID charges, or would be liable to reduced charges, would be very inflexible. In addition, it would catch different categories of businesses according to the general level of rateable values in the areas in which they were located. In an area with low rateable values sizeable businesses might find themselves excluded when they should be paying. The same exemption threshold in areas of very high rateable values might exempt only the very smallest of businesses.

§ Amendment No. 12 seeks to address this by enabling the local authority to determine an exemption or abatement of charge. This local approach will enable the category of small businesses at which exemption is aimed to be more accurately identified on an area-by-area basis. When this scheme is put to the local authority with a view to asking it to hold a ballot and invoke the procedure in every case I expect the promoters of the scheme to have made very clear proposals as to the appropriate level of exemption. But it would be for the local authority to decide whether that level of exemption was satisfactory or should be varied.

§ Amendment No. 11 requires the local authority to inform the BID applicant if it proposes to exempt small businesses by a determination provided for in another amendment. Such action may prompt the applicant to reconsider pursuing his application if the result of the exemption is that the scheme will have significantly fewer contributors than he originally envisaged. That he can do; he can withdraw his application. The procedure now exists under which there can be an exemption for small businesses. The decision as to where the line should be drawn—there may be more than one line; there may be a line for an abated contribution—is made by the local authority and the applicant can decide, in the light of that, whether he still wishes to proceed. I beg to move.

§ Baroness Hamwee
My Lords, I thank the noble Lord for markedly improving my amendment moved at the previous stage. I too had concluded that it was not possible to be prescriptive in terms of amount or proportion with regard to the exemption of small businesses. The noble Lord's amendment is more comprehensive than mine, and I certainly welcome it.

§ Baroness Farrington of Ribbleton
My Lords, we recognise that this amendment builds on suggestions made at Committee stage by the noble Baroness, Lady Hamwee.

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§ Lord Jenkin of Roding
My Lords, I am grateful for the remarks of the noble Baroness, Lady Hamwee, I hope to reciprocate in a moment. I beg to move.
On Question, amendment agreed to.

§ Lord Jenkin of Roding moved Amendment No. 9: Page 3, line 32, leave out ("thinks") and insert ("considers reasonable and").

§ The noble Lord said: My Lords, I beg to move Amendment No. 9. I say straight away that this was a very good point raised at Committee stage by the noble Baroness, Lady Hamwee. It requires the modification sought by the local authority to be both reasonable and necessary in the opinion of the authority. The noble Baroness makes a very good point and I hope that this amendment meets it.

§ Baroness Farrington of Ribbleton
My Lords, one hopes that a local authority would never wish to make any modifications unless it believed that they were reasonable. No doubt the intention of the noble Lord is to make the Bill more flexible in this respect. We would query however whether in the interests of flexibility it is desirable for modifications to be necessary as well as reasonable. We wonder whether the noble Lord would be prepared to look again at this aspect of the Bill.

§ Lord Jenkin of Roding
My Lords, I simply remind the noble Baroness of the remarks that I made a few moments ago. Of course, account can be taken of the point that she has made if the Bill makes progress in another place. I beg to move.
On Question, amendment agreed to.

§ Lord Jenkin of Roding moved Amendment No. 10: Page 3, line 34. leave out ("subsection 3(1)") and insert ("section 3").

§ On Question, amendment agreed to.

§ Lord Jenkin of Roding moved Amendment No. 11: Page 3, line 46, leave out from ("above,") to end of line and insert ("or the local authority have made, or propose to make, a determination under subsection (6) below which is relevant to the application, the local authority shall inform the applicant in writing of the modifications or determination (as the case may be)").

§ On Question, amendment agreed to.

§ Lord Jenkin of Roding moved Amendment No. 12: Page 3, line 47, at end insert— ("(6) The local authority may determine that any hereditament whose rateable value as shown on the local non-domestic rating list does not exceed an amount specified by the local authority shall be—

(a) exempt from the payment of business improvement district charges; or
(b) subject to an abatement of such charges,

and the determination may make different provision for exemption or abatement as respects different rateable values.").

§ On Question, amendment agreed to.

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§ Clause 5 [Provisional BID charge list]:

§ Lord Jenkin of Roding moved Amendment No. 13: Page 4, line 5, leave out from ("hereditaments") to end of line 7 and insert ("whose ratepayers will, subject to such modifications as may have been required under section 4(3), be scheme charge payers in accordance with section 2(4)(b).").

§ The noble Lord said: My Lords, I beg to move Amendment No. 13. That is intended to make clear that the obligation on a local authority to prepare a BID charge list relates to the premises of the ratepayers who have been identified by the person who wishes to set up a BID as the prospective contributors. As the Bill stands it could be read as requiring the local authority to compile a complete list of hereditaments in the area, which would not be sensible. The amendment also takes into account the fact that the businesses identified by the person proposing to set up a BID and listed in his draft scheme may have been modified by the authority as a result of its consideration of the application under Clause 4(3). I believe that this represents a procedural improvement and I hope that the House will feel able to accept it.

§ Baroness Farrington of Ribbleton
My Lords, it is important it should be clear who is to pay the charge but in so far as it is suggested that Clause 2(4) has the effect of imposing it, I feel bound to question this. The noble Lord may wish to look again at the drafting and the way in which the Bill creates liability for the charge.

§ Lord Jenkin of Roding
My Lords, I shall take note of the points just raised by the noble Baroness. Perhaps the House would accept the amendment for the time being.
On Question, amendment agreed to.

§ Clause 8 [Method of voting]:

§ Lord Jenkin of Roding moved Amendment No. 14: Page 5. line 17, leave out ("incorporate") and insert run ("unincorporate"). The noble Lord said: My Lords, I beg to move Amendment No. 14, which seeks to leave out "incorporate" and insert "unincorporate". This is a technical amendment to make clear that in the case of unincorporated bodies a voting paper may be completed by an officer of the body concerned.

§ Baroness Farrington of Ribbleton
My Lords, this appears to be a sensible correction.
On Question, amendment agreed to.

§ Clause 9 [Services etc provided by local authority]:

§ Lord Jenkin of Roding moved Amendment No. 15: Leave out Clause 9 and insert the following new clause— SERVICES PROVIDED BY RELEVANT AUTHORITY (" .—(1) Subject to subsection (3) below, improvements made through the implementation of a business improvement district scheme shall be taken as being in addition to and not in substitution for the level of services delivered by or on behalf of a relevant authority in the discharge of their functions, and accordingly—

(a) in deciding whether to make, or to refuse to make, an election order under section 4(1);
(b) in coming to an opinion that such an order should he refused under section 4(2); or
(c) in requiring modifications to a draft scheme under section 4(3),

a local authority shall assume the provision of the existing level of services in the area for which the business improvement district scheme is proposed. (2) In considering the level of services to be provided or maintained in the discharge of their functions, a relevant authority shall not treat any area less favourably by reason of the improvements which are or will be made in that area through the implementation of a business improvement district scheme. (3) Nothing in this section shall be taken as prejudicing the operation of section 70 of the Deregulation and Contracting Out Act 1994 (functions of local authorities): but where, pursuant to an order made under that section, services are delivered by a BID company, such services shall he treated as being in substitution for the services which would, but for the order, be delivered by the relevant authority. (4) In this section "the existing level of services" is the level of services which is provided at the time of an application for an election order under section 2.").

§ The noble Lord said: My Lords, I beg to move Amendment No. 15, which seeks to insert a new clause. I should like to speak to Amendment No. 16 which also seeks to insert a new clause. This amendment involves a good deal of redrafting. The intention is to deal with the difficult area of additionality. Here one is concerned with a situation in which if a BID is set up, the improvements should not just replace what the local authority would otherwise have done but should be additional to them.

§ This issue generated a good deal of interest in Committee. The new clause seeks to deal with a situation in which improvements proposed by a BID scheme are, for example, intended as a top-up of services which the local authority provides. There are a number of existing examples where precisely this kind of activity takes place. In a BID area people want a higher standard of street cleaning, pavement cleaning and lighting and better visual amenities. They may want greater security. The local authority may already provide some of that. What the BID seeks to do is to provide an improved and enhanced level of service for which the ratepayers are prepared to pay.

§ It is clearly inappropriate that a local authority should use a BID proposal simply as a way of offloading its own responsibility for providing the services by reducing them or progressively withdrawing them on the basis that the business improvement district company is going to provide them instead. The new clause therefore provides that in considering the application for a BID they should assume the level of services that they are providing at the time the application is made. That, as it were, is the baseline. It is in comparison with the baseline that the improvements have to be weighed. That of course does not deal with what might happen once the BID is actually set up.

§ As I think I said at an earlier stage, it might well be ridiculous to have, for instance, two separate processes for collecting the refuse or for sweeping the streets. A local authority might decide to withdraw services after the BID is established on the basis that the BID will take the strain, but if it were to reduce services not as a result of its establishment but as part of a general reduction, perhaps in a period of financial stringency, it would clearly be inappropriate for the BID district to be 1478 protected by requiring the local authority to maintain the level of services when it was actually reducing them everywhere else.

§ To deal with this type of situation, subsection (2) provides that the local authority shall not treat the area less favourably than any other area of the authority simply on account of the BID's existence: in other words, the area of the BID is neither privileged nor discriminated against when it comes to the provision of local authority services.

§ But the clause is without prejudice to the ability of the local authority and BID company to agree together that, for instance, the BID company would exercise the functions of the local authority where an order under Section 70 of the Deregulation and Contracting Out Act has been made. This provision replicates an amendment which was tabled and accepted in Committee, but of course it is not only the local authorities, as defined by the Bill as billing authorities for the purposes of non-domestic rates, which provide services. That is why it is necessary once again to refer to "relevant authority". I shall not repeat what I said on the earlier amendment. It takes account not only of the local authority which is the billing authority but those others which I referred to on that amendment.

§ The second amendment, the new clause following Clause 9, deals with what might be described as capital works proposed by BID schemes. Such proposals, typically, for example, planters, street furniture and so on, may also be on the local authority's agenda, but it will be understandable for a local authority to remove such proposals from its forward plan once a BID came along with a plan to make the improvements. That would seem perhaps to be undesirable.

§ On one view, such a consequence recognises that businesses which want improvement now rather perhaps than three or four years down the tracks would have to pay for that advantage, but in any event it would seem right that an authority which is contemplating improvements when a BID application is made should at least be required to inform the applicant that improvements are in the pipeline. That knowledge may prompt the applicant to delay setting up a BID or wait to see what the local authority actually does. Therefore what the clause provides is a notification procedure. The requirement to notify applies to the relevant authority which means that the obligation is not confined to the local authority to which the application is made, and, as I said, takes account of the fact that other authorities may have relevant capital works in mind.

§ The fact that a relevant authority may have provided facilities given time, may even have had plans to start work on them, will also seem to demand at least consideration by that authority of the making of a financial contribution to the cost of the BID, and to have them in contemplation, the authority must, after all, have seen a public benefit.

§ So these two clauses together cover a range of issues which may well arise on the application of a BID where there is work in contemplation, and where the local authority might therefore wish to have regard to that and must notify the BID applicant. The second clause seeks 1479 to deal with the situation by requiring the relevant authority to consider the making of a financial contribution where in the opinion of the authority it is likely that the improvements would have been made, or at least started, in the period during which the proposed BID will be in existence. I beg to move.

Lord Bowness
My Lords, I am grateful to my noble friend for bringing forward amendments to address the situation of additionality, and, in particular, capital. If one is looking at local areas, it is important that businesses wishing to combine through the purpose of a BID to bring forward relatively small capital improvements, which can in small district shopping centres make a remarkable difference, should be able to do so. The amendment represents safeguards. It enables that to happen but it also safeguards the position of the local authority's programme and the possibility of a contribution. Therefore I welcome the amendment.

§ Baroness Farrington of Ribbleton
My Lords, I welcome Amendment No. 15. moved by the noble Lord, Lord Jenkin of Roding, to address the difficult question of ensuring that moneys raised by the BID company are directed at extra services to those provided by a relevant authority. However, as I said in Committee there is a real difficulty in fixing a level of service, and assessing how a level of service can be sensibly measured and maintained over a number of years.
Amendment No. 15 provides that the "existing level of service" is the level of services which are provided at the time of an application for an election order. However, in its consideration of the BID application it is not clear how the local authority will ensure that improvements to be undertaken during the life of the BID company would be in addition to those that the local authority or other relevant authority would carry Out.
I welcome the principles of Amendment No. 16 proposed by the noble Lord, Lord Jenkin of Roding. It goes some way to encourage local partnerships and ensure that improvement schemes are not duplicated. However, the amendment seems to place the BID applicant in a position of uncertainty as there is no timescale by which the exchanges of information between the local authority and other relevant authority must be completed.

§ Lord Jenkin of Roding
My Lords, with the leave of the House, I understand the points that the noble Baroness has made. I think it is possible in these sorts of cases to be altogether too prescriptive and, indeed, if you have a local authority which is in discussion with a BID applicant, I have no doubt that these are matters which can be dealt with.
If the relations have reached the point where strict timetables, and so on, are necessary, the suggestion I would make is that that does not provide a very good augury for a satisfactory partnership, but I think the clause as it stands is quite workable. I am grateful for the support that it has received, particularly from my noble friend on the Front Bench. I hope that the House 1480 will be able to accept it. If, on further reflection, further changes would be necessary they no doubt can be introduced in another place.
On Question, amendment agreed to.

§ Lord Jenkin of Roding moved Amendment No. 16: After Clause 9, insert the following new clause— NOTIFICATION WITH RESPECT TO FUTURE IMPROVEMENTS (" .—(1) On receipt of an application for an election order made under section 2, the local authority shall send to any other relevant authority appearing to them to have an interest the name and address of the applicant and the particulars of the improvements proposed under the draft scheme. (2) A relevant authority notified under subsection (1) above shall forthwith notify the local authority in writing—

(a) of any proposals for improvements which are the same as, or substantially the same as, the improvements proposed under the draft scheme, or
(b) that there are no such proposals.

(3) Before making an election order, the local authority shall inform the applicant in writing of any proposals notified to them under subsection (2) above or any proposals for improvements to be made by them which are the same as, or substantially the same as, the proposals in the draft scheme. (4) To the extent that any proposed improvements of which the applicant has been informed under subsection (3) above are, in the opinion of the authority proposing the improvements, likely to have been made, or had work commenced on them, in the period specified by the applicant as the proposed duration of the business improvement district scheme, that authority shall forthwith—

(a) consider making such financial contribution to the cost of the improvements proposed under the draft scheme as is appropriate in the circumstances of the case; and
(b) following such consideration, notify the applicant of the decision in writing.

(5) Where the authority referred to in subsection (4) above are not the local authority to which the application for an election order was made, they shall forthwith notify that authority of the decision in writing. (6) Where a local authority have notified any other relevant authority under subsection (1) above, no election order shall be made unless notification pursuant to subsection (5) above has been received by the local authority.").

§ On Question, amendment agreed to.

§ Clause 11 [Formation and functions of BID company]:

§ Lord Jenkin of Roding moved Amendment No. 17: Page 6, line 3, at end insert— ("() No BID company shall be formed or constituted in such a way as to be a company controlled by, or subject to, the influence of a local authority within the meaning of Part V of the Local Government and Housing Act 1989 (companies in which local authorities have interests).").

§ The noble Lord said: My Lords, with this amendment I propose to discuss Amendments Nos. 24 and 25. Amendment No. 17 to Clause 11 prevents a BID company from being set up in such a way as to make it a company controlled by, or subject to, the local authority's influence. This term is defined in Part V of the Local Government and Housing Act 1989.

§ The result, if a BID company were to be controlled or influenced, would be to treat the expenditure of the BID company as though it were the local authority's. This would result in a substantial constraint on the BID company and plainly affect the expenditure plans of the 1481 local authority, too. This is a different point from that which I mentioned at the start of today's proceedings. It is a necessary technical amendment to avoid what would otherwise be a considerable difficulty.

§ The consequence of the amendment is that local authority participation in a BID company board will be limited. However, that does not preclude the involvement of local authorities and existing partnership arrangements under town centre management schemes. In fact, they often mirror the minority interest which is required to avoid the operation of Part V. The point is independent of whether the expenditure is general public expenditure.

§ The new clause after Clause 29 takes account of the fact that "local authority" as defined in the Bill is not the same as for the purpose of Part V of the Local Government and Housing Act 1989 which was referred to in Clause 11, as amended. The amendment to Clause 30 is a consequence of defining "local authority" separately in the new clause following Clause 29.

§ These complicated different definitions appear to be necessary because one is having to make use of existing local government legislation which has been drawn up with a variety of different purposes in mind. Nevertheless, I hope that the amendment is clear and workable and I beg to move.

§ Baroness Farrington of Ribbleton
My Lords, I support the intention of Amendment No. 17 to ensure that the BID company is not controlled by or under the influence of the local authority. Perhaps the noble Lord may wish to consider whether the clause will meet its aims at all times, in particular after the company has been launched.

§ Lord Jenkin of Roding
My Lords, I agree to take note of that important point.
On Question, amendment agreed to.

§ Lord Jenkin of Roding moved Amendment No. 18: Page 6, line 9, at end insert— ("() A BID company shall, in discharging its functions, have regard to the interests of scheme chargepayers.").

§ The noble Lord said: My Lords, a point of accountability was raised by the noble Baroness, Lady Farrington, in Committee. The amendment is designed to enhance the accountability of the BID company to the chargepayers. The effect of the amendment is to require the company to have regard to the interests of all scheme chargepayers in implementing the scheme. Clause 30 contains a definition of scheme chargepayers. I hope that that goes some way toward meeting the Minister's concerns. I beg to move.

§ Baroness Farrington of Ribbleton
My Lords, I am pleased that this amendment makes it clear that the BID company should, in carrying out its work, have regard to the interests of the scheme chargepayers. However, noble Lords may wish to consider whether this provides sufficient accountability to the chargepayers. I fear that 1482 the concerns about accountability that I raised in Committee would remain valid, despite the praiseworthy intention behind the amendment.

§ Lord Jenkin of Roding
My Lords, we have given careful consideration to whether the measure should go further. I remind the House that we are dealing with a company which will be subject to all the provisions of the companies Acts. Those Acts provide elaborate procedures for making the company and its management accountable to the shareholders and to a growing number of stakeholders. On reflection, the amendment which I have moved, and which the noble Baroness has welcomed, adds sufficient to the statutory accountability which already exists to make any further amendment to the Bill unnecessary. I hope that on reflection the Minister will recognise that.
On Question, amendment agreed to.

§ Clause 13 [Business improvement district charge]:

§ Lord Jenkin of Roding moved Amendment No. 19: Page 6, line 20, at end insert— ("() The liability of a person from whom a business improvement district charge is demanded shall be assessed as though the charge were a non-domestic rate in respect of a hereditament shown on the non-domestic rating list in force at the time the demand is made.").

§ The noble Lord said: My Lords, in moving Amendment No. 19 I shall discuss Amendment No. 26. In Committee, specific reference was made by the noble Baroness to the relationship of BID charges to the local government finance system as a whole. As I and the noble Baroness have indicated, the matter is under review and we are expecting a consultation paper in due course. However, the amendments seek in part to clarify the basis of liability to a BID charge. Amendment No. 19 treats the liability of a person to a business improvement district charge in the same way as a liability to a local non-domestic rate. In other words, for a ratepayer in occupation of premises within a BID it provides for liability on a day-to-day basis, just as the ratepayer is liable for non-domestic rates. The consequence of the amendment is that liability to BID charges follows liability to non-domestic rates set out in Part III of the Local Government Finance Act 1988.

§ Amendment No. 26 changes the definition of "ratepayer" to refer to a person who is liable to a non-domestic rate. That more appropriately aligns the definition with the rating legislation and makes clear that it is liability to rather than payment of a rate to which liability to BID charges relates. I beg to move.

§ Baroness Farrington of Ribbleton
My Lords. I can appreciate what the noble Lord is trying to achieve with Amendment No. 19. The Bill envisages a close link between liability to the charge and liability to non-domestic rates. However, the present amendment seems to leave unanswered a number of issues upon which the noble Lord may wish to reflect. For example, he might want to consider how the Bill should address the effect of changes to hereditaments; what happens when a new hereditament comes into being; and the 1483 treatment of unoccupied hereditaments. These and other related matters will need to be addressed if the Bill proceeds further.

§ Lord Jenkin of Roding
My Lords, as the Minister responds to many of the amendments, I at least recognise that if a Bill of this kind is to reach the statute book it will require the attention of parliamentary counsel and of the experts in the various departments concerned. That is normal procedure. The noble Baroness has made it abundantly clear on more than one occasion, both in public and private, that she does not expect this Bill to reach the statute book. In those circumstances, I entirely understand the reluctance of the Government to place parliamentary counsel at the disposal of myself and my supporters.
I take note of the point that she made and if at a later stage, or perhaps in future legislation, these points need to be dealt with they can be. In the meantime, I commend the amendment to the House.
On Question, amendment agreed to.

§ Lord Jenkin of Boding moved Amendment No. 20: After Clause 13. insert the following new clause— LEASES (".—(1) This section applies where premises are let to a person ("the tenant") who, by reason of his occupation of those premises, is or becomes liable to a business improvement district charge. (2) Where the tenant alleges that the level of rent which will become payable to the person from whom the premises are let ("the owner") on the grant of a further tenancy or on a review of an existing tenancy is attributable to the improvements provided for by the business improvement district scheme, the tenant may, in the absence of agreement with the owner as to the level of rent payable, apply to the county court. (3) Where an application is made under subsection (2) above, the county court may, after hearing the parties and any witnesses they desire to call, and having regard to the terms of any contract between the parties and the length of time which the tenant has been liable to the BID charge, make such an order as it considers just and equitable in the circumstances of the case. (4) Without prejudice to the generality of subsection (3) above, the court may make an order which provides—

(a) that the rent payable by the tenant shall not take account of any enhancement of value attributable to the improvements provided for by the business improvement district scheme; or
(b) that the whole or part of the charge shall be borne by the owner.").

§ The noble Lord said: My Lords, the amendment addresses an issue which was discussed at length in Committee when I tabled a new clause but withdrew it. The clause provides a mechanism by which landlords and tenants can resolve their differences through a mutual forum when the tenant takes the view that improvements result in an enhancement of the landlord's interests and the parties are unable to agree how to split the charge, or when the tenant takes the view that the landlord has profited unfairly from the improvements which have at least in part been paid for by the tenant through rent increases.

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§ Whether that situation arises will depend on the nature of the improvements provided by the BID scheme. However, it may be that the tenant is put in a position where the establishment of a BID scheme to which he contributes results in a general improvement in the area and then the landlord seeks to enhance the rental at the next rent review or when a new lease is applied for. The amendment addresses that situation by allowing the tenant to apply to the county court, which is given a broad power to make an order which is just and equitable in the circumstances.

§ The court's attention is directed specifically by the clause to the possibility of disregard in relation to rent payable which is attributable to improvements made by the BID or a contribution by the landlord to the BID charge itself.

§ The House will note that a relevant feature in deciding whether the landlord should contribute is the length of time for which the tenant has been liable for the BID charge. This new clause as now drafted would not, for example, permit a new tenant simply to go off to the court and seek a contribution from the owner. The application will arise only at the next rent review or on the granting of a new lease when the length of time for which that tenant has been in occupation and paying hid charges will be considered.

§ I suggest that the use of a county court rather than arbitration to settle the issue is appropriate because the improvements provided under a BID are not restricted to the occupier who applies but are improvements affecting the area as a whole. The House will remember that the county court already has jurisdiction in relation to the granting of new leases in cases where the Landlord and Tenant Act 1954 applies, as it does to most commercial leases. Specific precedent for the use of the county court as a forum to deal with disputes over the level of contributions is provided by Section 170 of the Factories Act 1961, to which I referred in Committee.

§ Finally, one of the criticisms of the clause tabled in Committee related to the provision for the lease to be determined. I accepted those criticisms. I believe that the noble Baroness used the word "draconian" and we have abandoned that proposal because we do not wish to appear draconian. Therefore, that provision does not appear in this proposed new clause.

§ I believe that we have gone a long way towards meeting the criticisms which were addressed in relation to what is a real issue. We have provided a procedure whereby justice can be done between landlords and tenants where there is a BID. I beg to move.

§ Baroness Farrington of Ribbleton
My Lords, we welcome the efforts made by the noble Lord, Lord Jenkin of Roding, to address the question of providing equity between landlords and tenants as regards the financial contribution to the cost of BID schemes and the consequential effect of schemes on rental income and costs.
With regard to the specific amendment, we have a concern about the amount of litigation which may arise and the burden on the courts. The amendment contains 1485 little guidance to the courts. The noble Lord, Lord Jenkin, may wish to explore the use of other mechanisms which may avoid the need to go to court. He may wish to consider whether it would be possible to incorporate the principles implied by the amendment in the normal mechanism for determining rents at rent review or on the renewal of the tenancy.
In addition to the very lengthy consultation which I know the noble Lord has already undertaken, he may find it helpful to seek the views of professional bodies such as the Royal Institution of Chartered Surveyors.

§ Lord Jenkin of Roding
My Lords, that is a very valuable suggestion. Of course we have been in contact with that profession. I thought that perhaps the precedents provided by the legislation which I mentioned—the Landlord and Tenant Act and the Factories Act—might have provided a suitable precedent. But of course that will be looked at if the Bill proceeds in another place. In the meantime, I believe that this proposal provides an appropriate procedure and I hope that the House may be able to accept the amendment. I commend it to the House.
On Question, amendment agreed to.

§ Clause 14 [Alteration of business improvement district charges]:

§ Lord Jenkin of Roding moved Amendment No. 21: Leave out Clause 14.

§ On Question, amendment agreed to.

§ Clause 16 [Recovery of business improvement district charges]:

§ Lord Jenkin of Roding moved Amendment No. 22: Page 6, line 35, after ("recover") insert ("as a civil debt").

§ The noble Lord said: My Lords, this amendment provides that a BID charge may be recovered as a civil debt. There was some suggestion that a BID charge might be deemed to be a local non-domestic rate for the purposes of collection and recovery. I believe that the noble Baroness suggested that in Committee.

§ On reflection, that seems to be a rather heavy-handed way of dealing with the issue. As it is the company which would receive the money, it seems perfectly reasonable that it might look upon it as a civil debt.

§ However, the noble and learned Lord the Lord Chancellor has announced a review of civil debt procedure, of which I have taken careful note. No doubt if the procedure is reviewed and this provision is on the statute book at the time, it will be covered by the review. In the meantime, to provide that it should be recoverable as a civil debt seems to me to be a sensible way of dealing with the matter. I beg to move.

§ Baroness Farrington of Ribbleton
My Lords, this seems a sensible amendment to achieve the end proposed by the noble Lord, Lord Jenkin.
On Question, amendment agreed to.

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§ Clause 29 [Local authority discharge of functions]:

§ Lord Jenkin of Roding moved Amendment No. 23: Page 9, line 6, at end insert— ("() In this Act, reference to the discharge of the functions of a local authority by another local authority includes reference to the discharge of those functions jointly.").

§ On Question, amendment agreed to.

§ Lord Jenkin of Roding moved Amendment No. 24: After Clause 29, insert the following new clause— INTERPRETATION OF "L0CAL AUTHORITY" (". In this Act, other than in section 11 so far as that section relates to Part V of the Local Government and Housing Act 1989 (companies in which local authorities have interests), "local authority" means a billing authority as defined in section 1(2) of the Local Government Finance Act 1992, responsible for the maintenance of a non-domestic rating list pursuant to section 41 of the 1988 Act.").

§ On Question, amendment agreed to.

§ Clause 30 [Interpretation]:

§ Lord Jenkin of Roding moved Amendment No. 25: Page 9, leave out lines 23 to 26.

§ On Question, amendment agreed to.

§ Lord Jenkin of Roding moved Amendment No. 26: Page 9, line 36. leave out ("subject to") and insert ("liable to pay").

§ On Question, amendment agreed to.

§ Lord Jenkin of Roding moved Amendment No. 27: Page 9, line 36, at end insert— (""relevant authority" means a local authority within the meaning of Part IV of the Local Government and Housing Act 1989 (revenue accounts and capital finance of local authorities);").

§ On Question, amendment agreed to.