§ 1.34 p.m.
§ Lord Rooker rose to move, That the draft regulations laid before the House on 7 September be approved [27th Report from the Joint Committee].
§ The noble Lord said: My Lords, I commend to the House the Business Improvement Districts (England) Regulations 2004 under Section 150 of the Local Government and Housing Act 1989 and under Part 4 of the Local Government Act 2003, which we debated at considerable length last year—it is a really exciting Act.
§ The sections and regulations provide for the setting up and operation of business improvement districts—or BIDS, as they are now widely known. Under the scheme, local authorities and businesses would be encouraged to work together for the benefit of their local 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, 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 ratepayers in the area covered by the scheme.
§ However, before any proposal goes 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, both in terms of total numbers and of rateable value. That double requirement protects the interests of both small and large businesses in the area. There has been widespread interest in the scheme and enthusiasm for the opportunities it offers. A lot of energy and commitment have gone into ensuring that the bids are a success.
§ Pilots have been set up to develop proposals to the point of being ready to go to a ballot. The pilots are of different sizes and types, and in many different locations around the country. They have shown the great potential of the scheme to improve the local business environment. I would like to take the 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 who have 1352 taken forward ideas to transform their own areas, including those involved in the Kingston project, which may be one of the first to go to ballot.
§ 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. Although the level of enthusiasm and energy generated by the proposed scheme has been very encouraging, it would dissipate if the mechanism for putting it into effect were flawed and therefore we have taken time to consult fully on the proposals in the regulations to ensure that they are workable, practical and robust. Some issues have proved more complex than originally anticipated. Most pilot schemes have not yet reached the ballot stage and those that are ready will not have to wait much longer. I understand their frustration, but it is in the long-term interest to get it right.
§ During the debates on the Local Government Act 2003, we discussed at length the issue of whether property owners as well as occupiers should be entitled to vote. I do not intend to revisit that issue here. There is nothing to prevent property owners making voluntary contributions, which we would encourage. We have also undertaken to conduct research into the role of property owners in business improvement districts, and we hope to have appointed a research body to take that forward by the end of next month.
§ There have also been concerns about the level of information on the proposals provided at the ballot stage to those businesses entitled to vote. Anyone liable for a 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 a specific provision in the regulations for that. At the heart of the scheme is a partnership approach. We expect discussion and consultation among businesses in the area to take place at a very early stage in the development of the proposals, and that those discussions will continue over time, so the details should be familiar.
§ If some businesses feel that there has been a material irregularity in the ballot, they can ask the Secretary of State to declare the ballot void or order a re-ballot. If businesses or the big 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 the billing authority's published policies and whether proper consultation took place before the proposal was put forward to the ballot.
§ Overall the scheme offers an opportunity for business and local government to work together for improvements in their joint interests. Those benefits are additional to what either local government or local business can provide individually. The regulations are fair, clear and contain the right checks and balances while encouraging innovation and productive local partnerships. It is a big incentive for people to work together. I beg to move.
§ Moved, That the draft regulations laid before the House on 7 September be approved [27th Report from the Joint Committee].—(Lord Rooker.)1353
§ Baroness Hanham
My Lords, as the Minister said, we spent a considerable amount of time discussing this last year. We were not always entirely in agreement at the end of those discussions. I think we had hoped that by the time we reached this stage, everything would have been sorted out. However, I am sorry to say that we do not think that the regulations are drafted adequately.
The current drafting leaves individual BID bodies the responsibility of setting up schemes to deal with, in any BID levy arrangements, inter alia new hereditaments, split or merged hereditaments, deletions from the rating list, exemptions and properties treated as part-domestic. Failure to deal with these matters properly in BID arrangements could make it impossible for billing authorities to collect BID levies, and it is likely to create a series of significant legal disputes. Will the Minister indicate what was the thinking that ignored these aspects?
Our understanding is that the lack of specification of these issues within the regulations will also result in BID arrangements varying widely throughout the country. We understand the intent is to allow maximum flexibility for BIDS to operate in the most suitable way, but this will make it difficult for multiple property occupiers to respond to BID proposals, as each BID arrangement will be different. Further consideration ought to be given to the means by which BID levy can deal with other technical issues.
The regulations do not prohibit any extension to the duration of the BID, any fundamental alteration to the scope of works or services, or any alteration to the identity of the service provider, without an alteration ballot. This seems unduly complicated, and the Minister might like to comment on it.
The BIDs guidance correctly highlights a number of advantages of incorporation for BIDs. Where incorporation is not adopted as the chosen legal status of the BID, then it will be essential to define clear financial accountability and reporting procedures in order to ensure and maintain partnership confidence in the financial soundness of the BID.
BID proposers can include property owners. There is an anomaly here, in that owners who are not in occupation will not contribute to the BID levy other than in respect of vacant properties. Property owners may, therefore, attempt to use the role of BID proposers to enable them to improve the value of their properties without making any financial contribution. We touched on that when we debated this issue before.
The question of ballot costs could be crucial to the initiation of BID projects. BID proposers will be expected to show evidence that they can cover the cost of a ballot, though if successful they will be entitled to recoup the cost of the ballot from the ratepayers. Though the legislation does not specify that BID proposers necessarily pay the costs of the ballot if unsuccessful, they are obliged to demonstrate sufficient funds for this eventuality. This will be a substantial requirement and it should act as a deterrent to unfeasible BID proposals. None the less, there remains some concern that such BID proposals could be promoted and therefore the 1354 additional penalty of a threshold of support for a BID below which proponents would be required to pay the costs of a ballot could be deemed appropriate by certain billing authorities.
We understand that the Government will be monitoring the operation of BIDS, and it may be that they will give further consideration to requiring evidence of written support for BID proposals from local ratepayers before a billing authority is obliged to proceed with ballot arrangements. Can the Minister confirm whether this is indeed the case?
The definition of persons entitled to fund the BID ballot is imprecise and unclear in the regulations. In the case of limited companies, there needs to be some definition as to those persons entitled to approve funding as ratepayers in a BID ballot.
Finally, the availability of information ought to be closely monitored and policed by the relevant billing authority to ensure that information is used only for the purposes of establishing and voting on a BID project. We suggest that billing authorities should also be required to provide the rating list descriptions for properties that fall within the geographic area of the proposed BID. In many BID areas, it might not be the intention to charge every ratepayer but only certain categories of them—for example, retailers or office occupiers. These descriptions may be a helpful starting point in seeking to identify, relevant properties.
I realise that we are at the regulation stage, but these seem to us areas of omission. If the Minister can respond to them, we can have the matter on the record before the regulations are introduced.
§ 1.45 p.m.
§ Baroness Hamwee
My Lords, we on these Benches are enthusiasts for BID projects, and we wish them well. Thinking that I was not competent to judge the regulations, I arranged for some inquiries to be made of those who might have comments about them. I was able to find almost nothing by way of criticism or unhappiness. The Association of Town Centre Management says that it is happy, believes that the regulations are robust, and that this is due to the "extensive stakeholder consultation" which has been undertaken. I am delighted to be able to say that, because it is useful to know that at least so far—fingers crossed—that seems to have worked.
I have one minor point—a query about whether businesses will be able to see how the BIDs levy is used by the local authority in its ring-fenced accounts. As I say that, I realise that the question more or less answers itself, but if the Minister has anything more to say, I would be grateful to hear it.
We should remember that as these things are being developed, local residents need to be part of the consultation process. Not every area is exclusively commercial; even though they may not be part of the voting and the levy process, they will clearly have views about what is happening in their area. But, as I say, we wish the BIDs well.
§ Lord Rooker
My Lords, I was very tempted to thank the noble Baroness, Lady Hamwee, for basically answering the questions of the noble Baroness, Lady Hanham. I considered that what the noble Baroness, Lady Hamwee, said answered virtually all the questions that the noble Baroness, Lady Hanham, asked, and I was not going to detain the House, because it seemed repetitious. In other words, they have the flags out in some of the towns in this country because BIDs are on the way.
There has been full consultation. There has to be proper guidance and full information so that people know what they are voting for and the cost. The fact is, there are 22 pilots around the country. I am reluctant to spend the time of the House reading out where the pilots are—it is all a matter of public record.
Much of the business community was opposed to the idea of the 20 per cent threshold, thinking that it could lead to problems. We have responded to those concerns by removing the requirement to show the 20 per cent before going to the ballot. Instead, we have introduced the power in the regulations enabling local authorities to require BID proposers to pay for the cost of a ballot if less than 20 per cent of eligible ratepayers vote for the proposal.
The regulations require the Secretary of State to be notified in writing if a BID proposer intends asking the relevant BID authority to put the BID proposal to a ballot. This should enable a minimum level of information about potential projects to be gathered.
One of the issues that was raised was who gets the ballot paper. With regard to a particular local address in a local authority, the variety around the country for small firms, particularly the national ones, is amazing. They all have their own arrangements. It is important that the right person gets the ballot paper, and that the person who gets the ballot paper understands what the BID is, even if it is 200 and 300 miles away near the head office where the rate bill is sent. All those factors can be taken into account in putting the register together.
Split hereditaments should be dealt with by the BID proposer in the BID proposals. We will provide extensive guidance on the development of a BID proposal. Defining all the different terms mentioned would have involved extensive, complicated regulations and removed the flexibility. The point is that the BIDs will be different. All the areas in England are different. Bedford is different from Blackpool; Hull is different from Ealing; and Liverpool is different from Plymouth. Peterborough and Newquay are different, Manchester is not the same as Reading, and Swansea is not the same as Woolwich. All those are involved in pilot schemes. The last thing they want is for us to assume that they will all be the same. If they are all the same, we have failed. Perhaps a by-product of a successful BID would be that all the high streets stopped looking the same.
§ On Question, Motion agreed to.