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Business Rates Supplements Bill

January 12, 2009

Business Rates Supplements Bill

Mr. Mark Field (Cities of London and Westminster) (Con): The issue of the business rate supplement is nothing terribly new. Much as we like to present it, as did my hon. Friend the Member for Northampton, South (Mr. Binley), as coming from the bowels of the Government over the last decade, it actually goes back quite some time. At the heart of the legislation lies the age-old questions: how should large-scale infrastructure projects that promote economic development be most equitably financed; and should business be able to benefit without contribution when windfall gains benefit property values as a result of infrastructural development projects that are made for the common good? It is difficult to get our heads round those difficult issues.

The whole conundrum of “value capture” has been with us in many ways since the great railway building mania of the 1840s and 1850s, when things were somewhat simpler. The promoters of the new railway networks that sprouted like bindweed across the UK during that crazy decade or so bought up the surrounding land, built houses and in that way paid back the capital costs of the new infrastructure. That, at least, was the theory; but all too often in practice, boom turned to bust. I wonder where we have heard that phrase before. The only investors who profited were those who either cashed out very quickly or those who were genuinely in the project for the very long term.

I must confess that I share my party’s concern that in today’s desperately uncertain economic and commercial climate there could scarcely be a less opportune time to introduce what undoubtedly amounts to a new stream of business taxes. The Minister fairly argued that we are putting in place a regime that will have an impact not just now, but in the decades to come, and it is also probably fair to say that relatively few schemes will come onstream during these difficult and tumultuous times, but I none the less share many of the concerns expressed by those on the Opposition Front Bench that now is not the time to bring such a Bill into play.

The very compulsion that is instrumental to a supplementary business rate is in stark contrast to the business improvement district initiative, which has been referred to by many hon. Members. My hon. Friend the Member for Ilford, North (Mr. Scott) made it clear in his contribution that BIDs had proved a great success in his own area. I have to say—I am surprised that the Government have not yet pointed it out—that the initiative was initially opposed by the Conservatives during my first term as a Member, but I acknowledge that there have been great successes in my own constituency. My hon. Friend the Member for Bromley and Chislehurst (Robert Neill) referred earlier to a new west end company and there is also the Paddington Waterside BID; a number of other areas are also keen to go through this procedure.

As I have said, the real issue relates to what is a proper sense of consultation and true ownership of how the process works. Such consultation contrasts with the element of compulsion that is integral to this particular Bill. Consent by local businesses under the process in the Bill would be sought only for those projects where the supplement made up for one third of the total cost. There are some understandable fears that that arrangement will become a charter that ends up driving business both old and new away from the parts of the UK that most need regeneration. The Government must address that concern as they follow up how the legislation works. Nothing could be more disastrous than areas desperately requiring regeneration having it taken away from them simply because a lot of business melts away, but that could well be the case.

I am lucky in that my part of central London has a thriving business sector, but there is no doubt that the problems affecting the retail sector as a whole might well impact on the west end. If secondary charges for various initiatives are levied on top of successful BIDs, it could well tip a number of businesses over the edge. The worst thing would be if vulnerable, small, independently owned and run businesses rather than the large-scale retailers went under. I hope that the Government will give some thought to that. If we look at the disadvantages stemming from the licensing regime over the past half decade, particularly since the Licensing Act 2003, we find that it is the small independent businesses that have proved most vulnerable.

I hope you will forgive me, Madam Deputy Speaker, if I focus the remainder of my brief comments this evening at a slightly more parochial level, as the provisions on prospective Crossrail developments, which my hon. Friend the Member for Ilford, North mentioned, may have a significant impact on central London.

The Business Rate Supplements Bill originates from the Lyons inquiry recommendation that local authorities should have greater flexibility, subject to certain safeguards, to raise revenue to invest in their local areas. I was unable to put the point to the Minister earlier, but the City already and uniquely has the ability to raise a supplementary business rate—reflecting the fact that in part it has a business franchise—so the notion is nothing new within the Square Mile. Given its long-standing support for the Crossrail project, the City’s position is also understandably informed by the fact that the proceeds of the supplementary rate in the capital are earmarked for the construction of Crossrail. With that objective in view, the City supports the introduction of SBR in London at the Greater London authority level.

I understand the concerns expressed earlier by my hon. Friend the Member for Croydon, South (Richard Ottaway) and other Members representing the suburban areas that are unlikely to benefit to any significant or direct degree from Crossrail—that this will be seen as a template and that it will benefit only certain parts of a particular district. London is obviously a very large area of 650 or so square miles. Crossrail benefits are regarded as being of national importance in the same way as the Olympics, but there is little doubt that a number of these infrastructure projects will benefit certain areas rather than others. The right hon. Member for Greenwich and Woolwich (Mr. Raynsford) made a robust defence not just of the Bill, but of the Crossrail project and spoke about the issue of additional stations. I am sure that he will appreciate, however, that a new station in north Woolwich will not be of much benefit to people who live in Hillingdon, Enfield or Croydon. Any Crossrail configuration will definitely go through my constituency and there will be great benefits, but we London Members need to appreciate the concerns that are felt elsewhere.