Community Right to Challenge (Business Improvement Districts) Regulations 2015

Lord McKenzie of Luton Excerpts

Tuesday 24th February 2015 Grand Committee

[The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Lord Ahmad of Wimbledon) (Con)]

My Lords, the Committee will know that town centres in England face significant challenges to survive and prosper in the internet age. In order to thrive, there is often a need to innovate and renew. The Government have recognised the importance of local high streets and sought to provide support through a range of programmes, including for example funding for the Portas pilots and town teams. We have established the Future High Streets Forum to advise government and develop practical policies, and we have supported retail markets through the Love Your Local Market campaigns, which have been incredibly successful in promoting local businesses. I visited one in Kingston-upon-Thames, which showed some incredible innovation by local entrepreneurs.

We have supported the establishment of business improvement districts, with a loan fund to help start up costs; we have introduced business rate support, including doubling small business rate relief, capping the inflation increase to 2% and a targeted discount for smaller shops, pubs and restaurants; and we have lifted planning restrictions to increase flexibility on high streets. In total this amounts to more than £1.4 billion of government support. All this is having an effect. Britain’s vacancy rate was 13.3% in November, its lowest level since June 2010 according to the Local Data Company figures of 8 December 2014. In February 2014, more than half of small business employers said that their profits had increased in the last 12 months, up by 13% on June 2013.

Business improvement districts are an important part of the efforts to revitalise town centres and the Government are committed to making sure that they can maximise their impact. That is why the Government conducted a review of business improvement districts to look at options to further strengthen the role of BIDs to ensure that they are able to play a key role in shaping and revitalising their town centres. The review was undertaken during the spring and summer of 2014 and involved meetings with British BIDs and Associations of Town and City Management, as well as round tables involving more than 20 individual business improvement district bodies. The department also met with the Local Government Association and visited a range of business improvement district bodies and local authorities.

The review demonstrated the additional value that a business improvement district can bring to a town centre. However, it also highlighted how the current model and legislation can restrict business improvement districts from being actively involved in important decisions that affect them. One identified option was to give business improvement districts the opportunity to run local authority services by adding them to the list of relevant bodies that can challenge to run local authority services under the community right to challenge. As we all recognise, local government services can play a vital role in making town centres clean, attractive environments, running local markets and supporting a thriving business environment. In many cases, local working between BIDs and local government is helping to regenerate high streets that might otherwise succumb to the pressures of out-of-town retail and online shopping.

In some instances, though, BIDs, as with the voluntary sector, have become frustrated by their inability to get their ideas for improvements listened to. In some cases, the BID may be a more appropriate body to deliver a service in their area; in others, they may simply want stronger levers to influence how services that are meant to benefit the retail area are delivered. The community right to challenge was introduced by this Government to allow the voluntary sector, social enterprises and parish councils the ability to make local authorities give full consideration to their proposals to deliver a service where they believe that they can do so better or differently. The right to challenge is not designed to be the first port of call for an organisation, nor does it provide an automatic right to take on a local authority service. However, it provides relevant bodies with the opportunity to have their ideas heard and to bid to run services. It is already allowing bodies such as charities and parish councils to put forward their proposals, and where they have done so it has been because they are convinced that the existing service could be improved.

The community right to challenge applies to local services, not to functions. It does not remove the accountability for a service from the democratically elected local authority, and it does not allow BIDs or private businesses to dictate commissioning decisions to a local authority. This change will add the following types of BID to the list of bodies able to use the community right to challenge: BIDs established under Section 41(1) of the Local Government Act 2003; joint BID arrangements—in other words, BIDs that operate across the boundaries of more than one local authority; property-owner BIDs; and joint BRS-BID arrangements—in other words, property-owner BIDs operating over more than one local authority area.

These changes will allow BIDs which have good proposals for delivering local services more effectively but are having trouble getting them taken seriously to use this power to make the local authority consider them, giving BIDs a further string to their bow when trying to improve conditions for business and growth in the local area. This devolves greater power and say to local bodies and helps continue to revitalise the great British high street that we all love and utilise. I commend these regulations to the Committee. I beg to move.

[Lord McKenzie of Luton (Lab)]

My Lords, the Minister has spoken glowingly about the progress the Government have made on the high street, but I put to him a recent report from PWC and the Local Data Company which, while recognising that the pace of retailers shutting shops reduced over the first half of 2014, shows that the gulf between openings and closures has nearly doubled. That survey covered the three months from July 2014 to 30 September 2014, and analysis shows that the net decline for the year to date has risen to 964 closures. That is quite a staggering number and belies, in effect, the fundamental point the Minister has made. Will he respond to that?

I have a specific question about what he referred to as the targeted discount for retailers—the £1,000, going up to £1,500—and the impact of EU state-aid provisions. As I understand it, it is subject to state-aid consequences. Is the discount per hereditament as long as the rateable value is not more than £50,000? Is the state aid de minimis similarly per hereditament or per business? I wonder how those two things are dealt with. In relation to the £1,000, if it is per hereditament, does that mean that the likes of Starbucks, with its renowned corporate social responsibility approach, would be eligible for the discount on each of its relevant outlets?

[Lord Kennedy of Southwark (Lab)]

My Lords, this regulation adds an additional type of body, the business improvement district, as a body able to deliver services locally. It can make an expression of interest in delivering a service under the community right to challenge provisions of the Localism Act. It enables certain bodies to provide services. In principle, that is fine, but it would be useful if the Minister could answer a number of points raised by my noble friend Lord McKenzie of Luton. Could he also say a little more about the community right to challenge in itself, and what has been the benefit of the proposals so far? I have not heard a huge amount about them since they were put on the statute book. As for business improvement districts, and their work to improve town centres, have those in his department thought a bit more about the sort of service that they would see these districts actually deliver? Does he see any risk of fragmentation of services, for example by focusing on a particular high street or area, and perhaps even additional costs to business or residents?

I do not know whether the Minister was in the House yesterday, but his noble friend Lord Naseby asked a very pertinent Question about the crisis on our high streets. When she answered the Question, the noble Baroness, Lady Williams of Trafford, placed a lot of emphasis on “click and collect”. I notice that the Minister did not mention that once in his presentation here today, and I must say that I am a bit sceptical that click and collect is going to be the solution to the problems on our high streets. You have only to walk or drive around in London or elsewhere to see that there is a real problem in our high streets now. The noble Lord, Lord Forsyth, also made a very interesting point about how much tax is paid by booming internet-based companies, which again causes problems for shops that are trying to compete.

Could the Minister also talk about the whole question of infrastructure and transport, while he has his noble friend Lady Kramer here? For high streets and shops to work, good transport links are needed. That is an important point as well. If he could deal with that today, it would be helpful. If he cannot, perhaps he could write to me on that point. I am not against these orders, but they go much wider than some of the points raised yesterday in your Lordships’ House.