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Local Government Bill

January 7, 2003

Local Government Bill

I, too, want to concentrate on business improvement districts, as the hon. Members for Bedford (Mr. Hall) and for Brighton, Pavilion (Mr. Lepper) did. However, I should like to start with some more general comments.

My background is in local government, although it is not as illustrious as those of many of today’s speakers. That is no longer a matter of embarrassment in the Conservative party, as it might have been in the past. I am a great believer in the concept of localism, and it seems that localism will be achievable only with far greater financial autonomy. The Bill is deeply centralising, and in that regard I endorse the comments of my right hon. Friend the Member for North-West Hampshire (Sir George Young) and my hon. Friend the Member for Mole Valley (Sir Paul Beresford).

In London we have had a dire experience since the mayoral election two and a half years ago. There is a lack of financial transparency. The battle between the Mayor of London and the Treasury means that Londoners have lost out. That is evident from our public services, not least London Underground.

The Bill makes some significant claims on council tax issues. I confess that I disagree profoundly with the second home provisions in clause 75, which seemed to have almost universal support earlier. The clause displays a strong misunderstanding of the notion of the council tax, introduced in 1991, which was designed to be partly a property and partly a personal tax. That is the basis for the 50 per cent. second home discount. However, I accept that Government pressure on local authorities, particularly Conservative local authorities, has forced a number of the Tory shire counties to lobby for this change, which I suspect will be made.

In general, I support the concept of revaluation, but I disagree with the power in clause 78 to change the valuation bands, with one caveat that was referred to forcefully by the hon. Member for Denton and Reddish (Andrew Bennett). Obviously the point is unknown to me from my constituency experience in central London, but clearly, if there should be a subdivision of band A in a number of our bigger northern cities it would make sense to have one.

Mr. Clifton-Brown: I am sure that my hon. Friend, with his knowledge of local government, can cast his mind back to the introduction of the council tax bands in 1991. He will remember that a large number of appeals were made, because people were aggrieved at finding themselves in a certain band. If we restructure the bands, exactly the same thing will happen. Does he agree that that would place a huge burden on local authorities?

Mr. Field: I could not agree more, and a wholesale revaluation or rebanding in that regard would not make a great deal of sense. Interestingly, when all those appeals took place 10 or 11 years ago, a lot of people felt aggrieved because the property market was somewhat questionable – it was coming down. Within a short time – perhaps this applies mainly to London and the south-east – a lot of people were keen for their properties to be revalued into a higher band for council tax purposes, which obviously made a difference to the resale value of their property.

I am concerned that the proposals to extend the number of bands beyond eight to perhaps 10 or even a dozen are, effectively, another stealth tax on middle class London and the south-east. We have already seen something of a gerrymandering of the grant system to favour the north of England and Scotland. There is no doubt that the old standard spending assessment was a complex system for local government finance, but the new system does not seem any more straightforward or transparent to me. Transparency must be at the core of the council tax, not least because if we are to move towards more local autonomy we should consider more local taxes. We should examine the American example, which involves raising a sales tax locally and using it on local matters.

As Ministers have rightly pointed out, we face a great concern that goes back to when my party was in government: more than 80 per cent. of local authority expenditure comes from central Government grant or the uniform business rate, so it is perhaps unsurprising that we have concerns over centralisation.

Business improvement districts are of key importance in my constituency, as they are in that of the hon. Member for Bedford. They are, of course, an American concept that was pioneered to provide a mechanism for private sector leadership in the general improvement of a locality. In my constituency, we have the New West End Company, which takes in Oxford street, Bond street and Regent street. I am inclined to think of the dark green spaces on a Monopoly board. Perhaps the idea would not have quite so much success in Old Kent road or Whitechapel road. Thankfully, neither is in my constituency. One benefit of the proposal is that it would allow people to work alongside local stakeholders. The private sector, therefore, would be able to take a lead on long-term projects, over and above the general local authority services. However, as a number of Members have pointed out, we must ensure that there is a genuine sense of additionality rather than a feeling that local government funding is simply being replaced.

We also need to ensure that there is greater public reassurance as to the deterrence of crime. I support zero tolerance on quality of life issues such as illegal street trading and graffiti. We must also ensure that we spruce up open spaces and enhance sanitation in many of our inner cities.

I also support the Government’s safeguards for the minority interest, which are in clause 52 and which were referred to somewhat less favourably by the hon. Member for Bedford. It strikes me as fair to have a twofold test involving, initially, the majority of stakeholders. However, the test must also represent a majority of rateable values. Interestingly, in New York, for example, a 60 per cent. values test applies. However, we must ensure that there are at least some safeguards against the "no taxation without representation" argument, which could equally be put by unreconciled minorities.

I hope that we shall be reassured in Committee on the organisation of ballots – regulations need to be set out in more detail than in clause 57 – and we must also consider the potential use of a veto by any relevant local authority.

The key long-term effect of business improvement districts, however, is that they result in increased property values so, as has been pointed out, property owners and not just tenants stand to gain most from their success. In the United States, for example, property owners pay rates but in the UK it is envisaged that the occupiers will pay, although owners have a greater vested interest in the long-term success of the area.

There is genuine concern that the UK approach will not be workable as that unfairness could impede initial interest in BIDs as well as their longer-term sustainability. I realise that we shall discuss these points in greater detail in Committee but, notwithstanding the Minister’s earlier comments, there should be more detail in the Bill rather than leaving the matter for regulation at a later stage. I accept the argument that we need a sense of flexibility – it is an entirely new area and we do not want to take an overly prescriptive view. However, there is a real worry that unless there is a clear idea in the minds of local businesses in areas that are subject to a BID scheme, there will be no BID at all.

The experience of Westminster city council in joint partnering with the private sector to fund such improvements is that land owners rather than occupiers are willing to contribute. Their engagement in business improvement districts should remain explicit. That experience is confirmed by the New West End Company, to which I referred earlier. The whole initiative has been driven by property owners; more than two thirds of the £1.6 million budget of the past three years was funded by owners rather than tenants. I appreciate that what goes on in the west end of London may be somewhat different from what happens in many other parts of the UK, but it shows the importance of bringing owners on board at an early stage.

Comparisons have been made both with New York and with other US cities, especially by the hon. Member for Brighton, Pavilion (Mr. Lepper). However, one or two of those comparisons do not entirely pass muster and when we are setting up BIDs we should ensure that we do not have such high expectations for them that they are disappointed. In New York, for example, BIDs came in only after a large increase in police numbers and a commensurate fall in crime rates. Similarly, New York could generate specific quality of life legislation in some localities. Even though we can make use of byelaws in this country, such legislation would not be appropriate in the UK. Furthermore, New York has a 24-hour transport system and is able to disperse large crowds rapidly – that is especially relevant for London – so it is far easier to deal with quality of life issues there.

I have grave concerns about several other points to which my right hon. and hon. Friends have already referred. However, the BIDs initiative is positive. It needs far more scrutiny in Committee, which I hope will ensure that a robust business improvement district regime will come about.