Local Government Finance
Debate between Gareth Thomas and Steve Double(7 years, 9 months ago)
Commons ChamberRead Full debate Read Hansard Text
Mr Thomas
I am glad the Minister got to his feet, because I was coming on to his performance yesterday in Committee. Given the deep and profound concerns about the business rates revaluation, it was a little surprising for the Secretary of State to send out his Minister to reject the idea that any change to business rates was necessary. His spokesperson was still being quoted yesterday as claiming that business concerns were just scaremongering.
In 2005, PricewaterhouseCoopers tracked the tax liabilities of Britain’s biggest companies and found that half of the total came from corporation tax, while just 11% came from business rates. Today, corporation tax has fallen to 19.7% of tax paid by the top 100 group of companies, while the figure for business rates is 21%. Moving away from taxing revenue and profits, and increasing the tax share on businesses more reliant on bricks and mortar is surely going in the wrong direction given the rise of the digital economy.
I welcome the Secretary of State’s decision to have a review of the support for small businesses hit hardest by the business rates revaluation. I look forward to him being able to instruct his Minister, and encourage his hon. Friends, to support the amendment we have tabled to the Local Government Finance Bill on Report, requiring a full review of business rates and their impact on local government finance before the Bill comes into effect.
Steve Double
I just wonder whether the hon. Gentleman is able to clarify something for me. He has consistently said that he supports the 100% retention of business rates for local councils. However, he seems to advocate lower business rates for businesses and more money for local councils, which does not seem to add up. Where will the money come from?
Mr Thomas
As we have gently suggested before in this Chamber, we simply do not think it is the right time to cut corporation tax for businesses like Amazon, Sports Direct or Britain’s biggest banks. It is important that we get business rates right, because from April 2019 local government will be increasingly reliant on that income stream to fund vital public services. Since the Conservative party came to power, funding from central Government has been cut by over 40% and they want to axe the revenue support grant completely. Councils will spend some £10 billion less on England’s local public services this year than they spent in 2010-11. Ministers have never denied the Local Government Association’s calculation that local authorities are facing a £5.8 billion gap by 2020 just to fund statutory services.
Today’s settlement represents a further cut in councils’ core spending power. Not a single extra penny of new money for local government has been found for the care of Britain’s oldest and most vulnerable citizens. Some £4.6 billion has been axed from social care budgets since 2010. More than 1 million English adults, people who have served our country and deserve to be treated properly and with dignity, are estimated to have unmet care needs, which is a remarkable, almost 50% increase since 2010. The crisis is having profound consequences for the NHS and forcing councils to axe funding for other vital local services to enable them to provide even the most basic service to the most vulnerable.
Last July, the Association of Directors of Adult Social Services warned of serious problems in social care, but the Secretary of State did not act. In October, the Care Quality Commission said that adult social care services were at a “tipping point”, but the Secretary of State dismissed it as an exaggeration. There were briefings that action would be forthcoming in the autumn statement, but that came and went. When the statement on local government finance came around in December, all we were presented with was money being moved from one council funding pot to another and permission to raise council tax quicker than before.
The social care precept raises vastly different sums of money in different areas and is completely unrelated to need. It shifts the burden of solving a national crisis on to hard-pressed local councils and local residents, including all those only just managing to make ends meet. Members from all parties have called on the Government to act. The Chairs of the Health, Communities and Local Government and Public Accounts Committees have called on Ministers to act, yet the crisis has just got worse. The Association of Directors of Adult Social Services and the head of the NHS have also called on Ministers to act, while Age UK says that the English social care system is facing complete collapse.
Local Government Finance Bill (Tenth sitting)
Debate between Gareth Thomas and Steve Double(7 years, 9 months ago)
Public Bill CommitteesRead Full debate Read Hansard Text
Steve Double
I beg to move, That the clause be read a Second time.
With the new clause, I seek clarification of the legislation and confirmation of my belief of the original intention of the Local Government Finance Act 1988 regarding the agricultural exemption from non-domestic rates for nurseries and market gardens. This has been prompted by a court case brought by the Valuation Office Agency in 2015 against Tunnel Tech Limited, mushroom growers who grow their product under polythene or glass.
For more than a century, legislation has dictated that agricultural land and, latterly, buildings have been exempt from rating liability. The principle of an agricultural exemption is well established. The Court of Appeal, however, interpreted the legislation as not to include nursery grounds consisting wholly of greenhouses, polythene tunnels or buildings with the exemption.
The horticultural industry in the UK has undergone significant changes in recent years in order to increase our home food production, something I am sure we all support. That has included more and more crop-growing operations taking place under the cover of polythene tunnels and other buildings. It has also led to more sophisticated growing techniques being explored.
There is no longer a distinction between enterprises that would have been classified as a “market garden” and those classified as a “nursery ground”, as per the legislation. They are instead simply “food growers”. Many growers are a combination of both “nursery ground” and “market garden”, operating from the same premises with no distinction of areas. The Valuation Office Agency argument in the case centred around the fact that Tunnel Tech did not produce mushrooms that were ready for market.
In order to become more productive and cost-effective, the industry has become increasingly segmented in its approach to production. There has been a move towards businesses specialising in niche production. Growers may now only produce one stage in the development of an end product, such as plug plants for vegetable production. That is more economical for the industry, allowing it to be more competitive in the global marketplace. Significant increases can be made in production, where each stage can be carried out at individual premises designed solely for each specific stage of production. Dealing with all production stages on the same premises has substantial limitations.
With more and more agricultural land being taken up with housing provision for our expanding population, there is a need to be able to produce food for the country over smaller areas more efficiently and more reliably. That can, to an extent, be addressed by growing more product under cover.
The Tunnel Tech case has highlighted how outdated or ambiguous the current legislation is in that regard. It makes a defined distinction between “market gardens” and “nursery grounds” and treats them differently for exemption purposes, whereas enterprises today are, in reality, simply growers.
It is unlikely that, in drafting the legislation, it was Parliament’s intention to limit UK horticultural production, as will be the case potentially should the legislation stand as it is. A significant ratings bill in addition to other rising costs will prevent investment in growing businesses. It will prevent growers from exploring new techniques requiring under-cover operations. It may also have a reverse effect on operations that already do grow under cover, forcing them to abandon these growing methods. I have tabled the new clause simply to clarify the relevant legislation, which is the Local Government Finance Act 1988, and to ensure that the agricultural exemption from ratings liability is protected as the industry evolves and modernises. I do not believe that there will be any significant fiscal impact to the Treasury from this change, as it is not revenue that the Treasury has historically been receiving.
Mr Thomas
I am sympathetic to the new clause. I just wanted to clarify the question of cost. We would not want to support anything without knowing whether there were cost implications. It would be helpful for the hon. Gentleman to clarify whether he has checked with the House of Commons Library or with other sources about the potential financial cost to the Treasury of the new clause.
Steve Double
I am grateful for the hon. Gentleman’s intervention, and indeed for the revelation that he has come to the view that we need to consider the costs of all new moves, which is welcome. I have not got the figures from the Library, but my understanding, from speaking to people in the Treasury and people from the National Farmers Union, is that this is not money that the Treasury has historically been receiving. This is a recent development; it has happened only in the last few months. Therefore, if the change happens, this will be new money—increased revenue—to the Treasury. It is not something the Treasury has been receiving historically; I believe that is the case. Therefore, I am seeking support for the new clause to restore the position that I believe was Parliament’s original intention when the legislation was introduced in 1988, to clarify the position in the light of the court ruling and to continue this vital support to our food producers.
I do not intend to push the new clause to a vote. I simply seek the Minister’s response and put down a marker that I believe that this issue needs to be addressed by the Department and by the Treasury to provide clarity and certainty for our food growers that they can continue to enjoy the relief, which I believe was the original intention.
Local Government Finance Bill (Eighth sitting)
Debate between Gareth Thomas and Steve Double(7 years, 9 months ago)
Public Bill CommitteesRead Full debate Read Hansard Text
Steve Double
I want to make a few comments as someone with a fair amount of experience on this matter. I was the Cornwall Council cabinet member responsible for public toilets when a major review of public toilet provision was undertaken to look at—from the unitary authority’s point of view—the best way to deliver this vital service to the public. As the hon. Gentleman said, this service is important to many people. In Cornwall, it supports not only the tourist industry on our beaches and in our parks, but local people, including the elderly, people with medical conditions and people with young families, who often need to use these facilities.
Steve Double
I am grateful for that intervention. I was going to say that I feel partly responsible for the clause. Along with my colleagues in Cornwall, I lobbied the former Prime Minister and Chancellor hard on this issue, because our experience in Cornwall was that this was a particular barrier for maintaining the provision of public toilets. From my point of view—I cannot speak for the Minister—there is not a one-size-fits-all solution across the country. In different areas, there are different challenges in maintaining public toilet provision. The discretion allows local authorities to set out whether it is a priority in their area.
Let me explain why the measure is so welcome. In Cornwall, which has a large unitary authority covering a very large geographical area, having all those toilets run and maintained by the unitary authority is not the most efficient way to do it. It is far better to devolve the provision and maintenance of those facilities down to local parish councils, town councils or other groups that are better placed to maintain them and keep them open at the hours that the community needs them—that may not be all year round, or all day. Those organisations will be better and more efficient at keeping the facilities clean and well maintained, because people can do it locally, rather than there being a centralised process like the one that Cornwall Council had, with people driving all over the county just to maintain the facilities. Devolving down the running of the facilities to local groups and councils is much more efficient and effective.
In my experience as a cabinet member, one of the biggest barriers to parish councils taking over the running of the facilities was business rates. Often, a fairly small parish council whose precept was only a few thousand pounds a year would consider taking on the cost of maintaining the public toilets, but they would find that the business rate alone on the toilets was more than their whole precept. Deciding whether it was feasible and affordable to take on the facilities was a significant challenge, even if the council recognised that taking them on would be very beneficial to the community. Putting discretion in the hands of the senior authority is sensible, because in the case of Cornwall Council, it can then decide that it sees the value of these facilities across the county. It may want to play its part in helping to maintain them and keep them open, but it may not want responsibility for their day-to-day maintenance and running. It can make the decision to grant that discretion. That would help parish councils with the cost of taking on these facilities, and perhaps enable them to afford to do so. This is a sensible and welcome move, and it has my full support.
Rob Marris
Certain houses of repute with cultural artefacts get a tax break for opening at certain times of the year to the public. My hon. Friend the Member for Oldham West and Royton did not have time to mention that the redoubtable Brian Dean, the gentleman with Parkinson’s, tried every shop in a row of shops, asking if he could use their toilet, and was refused, as is their right. Having desperately tried to avoid it, it was only at that point that he had to soil himself. That is a sad reflection on those shops, but I understand it. I would like the Minister to give some thought to whether it might be possible to structure a business rate relief for private premises, such as a coffee shop in Allerdale, that allow the public access to their toilets, in the way that we allow tax reliefs for certain houses with cultural artefacts. We put something in; there are certain things that they provide; and they get a tax break for providing that service.
As we all know, with our ageing population, it is statistically likely that there will be a rise of near incontinence and urgency. The need for access to toilet facilities among the population as a whole, and the need for those facilities to be fairly readily available, will increase. I say that as one of the patrons of Wolverhampton Mencap. Many adults with learning difficulties get a sense of urgency and need to get to a toilet very quickly. I would ask the Minister to look at a system in which private premises that were not “wholly or mainly” a public lavatory facility, as in the clause, but that had a toilet—perhaps a coffee shop—and made it available to the public for a specified number of hours or whatever got some business rate relief for providing that public service.
Steve Double
I note with interest the hon. Gentleman’s dig at Cornwall, but Cornwall is incredibly proud to be the only rural area that has had a devolution deal with the Government. We see that as a sign of the Government’s support for and confidence in Cornwall. The deal is not the end of the story. We do not know where it will take us, but in Cornwall, rather than putting down the devolution deal we have been granted by the Government, we celebrate it.
Mr Thomas
I am not doing down devolution at all; I am merely representing the concerns of the hon. Gentleman’s council, in a way that he is not doing, about its exclusion from the ability to levy the infrastructure supplement. I would applaud his representing his constituents and his council’s concerns properly, and his wanting to see the devolution deal that his council has negotiated enhanced in the way that we are suggesting.
The Minister has made an attempt to justify the exclusion from the measure of all authorities that do not have a combined authority and a Mayor. I have to say that it was not a convincing performance. Given the number of representations that we have heard from county councils and district councils that are frustrated with the insistence of the Secretary of State and the Minister that there has to be a Mayor before they may have this power, we will speak for them in a way that the hon. Member for St Austell and Newquay will not speak for his constituents. We will speak for councils in Swindon in a way that the hon. Member for North Swindon will not. We will speak for the residents of Torbay, who need investment in infrastructure, in a way that the hon. Member for Torbay will not.
Local Government Finance Bill (Fourth sitting)
Debate between Gareth Thomas and Steve Double(7 years, 9 months ago)
Public Bill CommitteesRead Full debate Read Hansard Text
Mr Thomas
I am grateful as ever for your advice, Mr Gapes. The other concern that was touched on, but not answered, by both the Minister and the hon. Member for North Swindon was the concern about Heathrow. The extra business rates growth that will surely come in the wake of a third runway at Heathrow—their treasurers, if not their local residents, will surely already be beginning to count up and look forward to all the extra revenue—will probably be far more significant in terms of promoting economic growth in the areas surrounding that third runway than anything that local councils might do.
Steve Double
Does the hon. Gentleman not recognise that expanding Heathrow is about growing not the economy around the airport but the economy of our nation? Cornwall expects to benefit in economic growth from the expansion of Heathrow because of the additional links that it will create with businesses in Cornwall.
Mr Thomas
With respect to the hon. Gentleman, that is precisely my point. In terms of business rates, the authorities that will benefit most from a third runway at Heathrow will be the local authorities in the immediate surrounding area. Without effective redistribution, there might be some additional business rates from businesses operating in Cornwall that are perhaps attracted to Britain as a result of a third runway, but primarily the main authorities that will benefit from the increase in business rates growth from that third runway will be the local authorities in the surrounding area.
Local Government Finance Bill (Third sitting)
Debate between Gareth Thomas and Steve Double(7 years, 9 months ago)
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Mr Thomas
My hon. Friend makes a good point. I think again of Allerdale Borough Council. In Keswick, there is a hospital that used to have an accident and emergency department, but that has been reduced to a walk-in centre and there is talk of it being closed. That is of considerable concern to the local community, but I suspect that it is also of concern to the treasurer of Allerdale Borough Council because of the potential lost business rates income. I hope that my hon. Friend will catch your eye, Mr Gapes, so that he can dwell on that point.
I want to dwell a little further in the context of amendments 1 and 23 on redistribution between poorer and richer areas. As I pointed out in response to the hon. Member for Waveney, if one analyses local government reaction to the Conservative party’s enthusiasm for 100% business rates retention, one will see that there is real enthusiasm for it in wealthier areas, because councils can see the potential benefits of the extra business rates income that might come their way, particularly if they have lots of land for development. However, poorer areas that have already lost out in terms of the revenue support grant, as my hon. Friend the Member for Wolverhampton South West says, and where there is less scope for large-scale property development, are more worried about what this measure might mean.
Steve Double (St Austell and Newquay) (Con)
I am listening with interest to the hon. Gentleman’s point. Cornwall is, by some measures, the poorest county in England, so will he reflect on the fact that Cornwall Council has welcomed this change and indeed volunteered to be one of the pilot areas?
Mr Thomas
It is commendable that Cornwall has offered to be one of the pilot areas. As the hon. Gentleman will have heard me say, it would be lovely to know how the pilot scheme will work for Cornwall, and indeed for Liverpool and London. The Minister and his Department have not yet got round to publishing more detail about that. The hon. Gentleman may have the advantage of knowing how the scheme will work in Cornwall, and I hope that he catches your eye, Mr Gapes, so that he can tell us. That would certainly give the Committee more information than I suspect most of us have. I would not be at all surprised if the Minister was not even sure how the scheme was going to work in Cornwall, so I am sure that the hon. Gentleman will be extremely helpful in that regard.
The hon. Gentleman makes an interesting point. When one thinks of Cornwall, which is a very attractive county, one does not immediately think of huge tracts of land being available for out-of-town shopping centres—the one area of economic growth that might lead to substantial business rates income for local authorities. Cornwall is surrounded by sea, which is a natural barrier to economic growth. It also has huge amounts of farmland, which is essential to retaining the county’s character and is also a natural barrier to economic growth. Of course, Cornwall Council will want to be one of the first pilot authorities, so that it can see how the redistribution arrangements might work. Although it may not yet have seen the detail of the amendments that I have tabled, I expect that it is concerned about how the redistribution arrangements will work in practice in the long term. The hon. Gentleman will be able to play back that at least the Opposition are fighting Cornwall’s corner, even if he is perhaps not quite so enthusiastic on that point.
I come back to the issue of poorer areas versus richer areas and the redistribution arrangements between them. A helpful analysis from the House of Commons Library compares the spending power of councils that have a high index of multiple deprivation rating—in other words, the poorer areas of the country—with that of authorities that have a low index of multiple deprivation rating, which one might describe as the richer areas of the country.
The analysis shows some stark realities, which are particularly pertinent to this debate about redistribution. Let me give a couple of examples. Blackpool, which ranks as the highest in terms of multiple deprivation, had an actual revenue spending power in 2011 of £165.51 million. By 2019, it is projected to have a revenue spending power of only £126.2 million—a loss of £39.31 million in revenue spending power, or a percentage loss of 31%. Compare that with Hart in Hampshire, which is the local authority that ranks lowest in terms of the level of multiple deprivation. In 2011, it had a revenue spending power of £9.35 million. It is projected to see that drop to £8.91 million by 2019, which is a change of £440,000, or just under 5%. So Blackpool is projected to lose 31% of its spending power by 2019. Hart in Hampshire is expected to lose just under 5%. That is a huge gap. In the context of that huge gap, Blackpool Council could be forgiven for being very nervous about what 100% business rates retention might mean, without more detail on whether it will benefit from the Minister’s changes to the redistribution arrangements.
Perhaps a couple of other examples will bear witness to the truth of that potential concern. Hull had £266 million of actual revenue spending power in 2011, which is projected to fall to just over £202 million by 2019—a loss of some £63 million, or a 31% loss in its spending power. Compare that with the Chilterns, the third least deprived authority in England according to the index for multiple deprivation rating. It had an income in 2011, in terms of actual revenue spending power—let me use the right phraseology—of £11 million. According to the analysis, that will drop to £9.86 million by 2019, which is a change in actual revenue spending power of just over £1 million. That is a drop of 11%—that is still a significant drop in its spending power, but is nothing like the scale of the drop that one is going to see in Hull. So the Chilterns local councillors might be forgiven for being quite enthusiastic about 100% business rates retention. They might think that, if the Government continue to operate the redistribution formula in the way that they have, although the council might lose, it might not lose much in relative terms.
One suspects that councillors in Hull, particularly those with responsibility for finance, will be extremely concerned that, if the current system of redistribution continues, given how much they have already lost in spending power and are projected to lose by 2019, they will risk losing even more capacity for spending power when 100% business rate devolution comes in.
Local Government Finance Bill (Second sitting)
Debate between Gareth Thomas and Steve Double(7 years, 9 months ago)
Public Bill CommitteesRead Full debate Read Hansard Text
Steve Double
Q I take your point about growth and development. I was more touching on the direct link and the fact that, at the moment, my local business community pay their business rates to central Government. There is no direct connection between them and their local council in how that money is spent, whereas if the Bill comes into force, there will be a direct connection, and the business community will see that they are directly funding the operation of the council. That was more what I was touching on. I take your point about future growth, but I see the current strengthening of that direct relationship.
Sean Nolan: That it includes the kind of richness of the conversation between a local council and its local businesses is undoubtedly part of the positive benefit. It feels like trying to do that is an agenda for every council up and down the country.
The caveat we need to bear in mind—I am afraid this is part of the complexity of what will now have to happen—is that it is not a one-to-one relationship. Because of the existence of top-up and tariffs, what businesses pay may not necessarily go to their local authority and may go elsewhere. That makes managing expectations in the conversation a bit more complicated. However, in theory it definitely adds to the benefit of the conversation, although the one-to-one relationship you describe is a bit confused by the top-up and tariffs.
Christian Spence: The 100% retention on its own has the potential to open up a greater and more transparent conversation between business and local authorities about where the money goes and how it is spent. You are right that most businesses perceive that business rates vanish into a black hole—they have no idea where it goes. However, the 100% retention aspect of this Bill alone will not deal with that. It can enable a better conversation between local authorities and local businesses, but there will be a lot of work to do to develop that aspect.
There is an opportunity in a later aspect of the Bill for greater involvement involving the widening of the bid arrangements to property owners, the Business Rate Supplements Act 2009 becoming applicable to mayoral combined authorities, and specifically the new idea of a mayoral infrastructure levy that is available to those bodies. There is an opportunity in those measures for a direct, two-way, open and honest relationship between the BID and/or the local authority on one side and business on the other, or between the mayor and the greater visibility of local government, which we should see following from 5 May onwards.
That transparency and openness are welcome. The view of businesses across the country is that if local authorities are looking to increase spending or even to levy specifically for additional strategic projects in their areas, business is not necessarily unwilling to pay—the existence of more than 200 BIDs in the country is tacit evidence that that is the case. We are pleased to see the consultation aspect of mayoral infrastructure levies move on from a majority vote of the local enterprise partnership to a wider consultation—that is in the spirit of moving things in the direction that we would like. However, the challenge in the Bill from our point of view is that it stops short of a ratepayer vote against the levy and simultaneously brings forward the wider participation of BIDs to owner-occupiers, and of business rate supplements to combined authorities, which means that the Bill is confusing its own purpose directly in two ways. We are very happy to lay on the table the opportunity for the mayor of a combined authority to levy a tuppence supplement in business rates under the 2009 Act, and to be forced to ballot local businesses to ensure buy-in and support, but, under the mayoral infrastructure levy it can deliver that same tuppence levy without a ballot of the members of the business community. If we are not careful, we will introduce a perverse incentive. Where there are opportunities to increase that engagement and build those relationships, one aspect of the Bill will damage that rather than move it forward.
Mr Thomas
Q One suggestion we have heard is that the needs assessment process should be conducted independently of Government. I wondered where the panel stands on that question.
Sean Nolan: Can I play back to the Committee some reflections from when I was involved in policing recently as a treasurer in that world? You will remember that the Home Office went through quite a challenging exercise, looking at new formulae for allocating policing, which ran into some difficulties. One of the bits of feedback that professionally a number of us put in on lessons learned is that the needs bit—the conversation we are having—is about complex statistical modelling. As well as having confidence in the actual indicators in a conversation with the sector, you also need to have confidence in the choice of statistical technique. I therefore think that it is not so much about having an independent element outside of the system. What would be really helpful would be if DCLG read across from elsewhere and brought into the process an independent element, perhaps advising in real time on the choices of statistical techniques, and some kind of independent validation of procedure. I have to say that that would be a confidence-building part of building consensus around what is fair.
Jo Miller: I thought Mr Nolan put it beautifully.
Mr Thomas
Q Do you think there should be an element of independence in the needs assessment process that is being done at the moment, and that might be done at future points?
Professor Tony Travers: The needs assessment process that underpins local government finances has been an element of pressure and complexity going back to the 1920s, but particularly since the 1960s. We are now going to have a reset, after some time without a reset. Any time there is a reset, you would expect—all other things being equal—a big jump in the change, inevitably. The longer you have a period without a change, the bigger the jump between those places that have become needier and those that have become less needy, relatively speaking.
There is another tension here: the longer you leave the period between resets, the more instability you will get at the point of the reset, but you get less within the period during which there is no reset. There is then the issue that the longer you leave it without a reset, the greater the perceived—I stress perceived—unfairness for those that feel that they are being left behind. The truth is that the English system of local government finance has a very high expectation of redistribution buried within it that goes back a long time. There are a lot of pressures from politicians of all parties to make it fair—I am sorry to say this—for their authorities. Fair is more for us—which is fair enough. At the point of the reset, there will always be a war of all against all to get it right for our class and our type of authority. Having said that, I think most politicians centrally and locally would share the view, and I say this again in front of a number of politicians, that that is a reasonable thing to do—that is, to have a system that is seen to be and is fair—but delivering fairness is difficult, particularly at a time when local government finance in total is static or the total is falling.
If you think about it, in the world we are moving to, local government spending will be lower in total in 2019-20 than it is today. At the point of the redistribution—this is also true for schools’ funding redistribution, by the way—it is not as if you are redistributing at a point where it is growing by 6% a year; it is when it is growing. That makes it a far more painful business for Ministers and other MPs, simply because there is less money in the system. It is just a fact of life.
Steve Double
Q Something has just come to me while listening to the discussion and following on from the question about granting planning permission for large units. I represent a fairly rural constituency in Cornwall, where we have seen a number of convenience store-type premises that qualify for relief, perhaps small business or rural rate relief, being converted to residential units. I wonder whether there will be an unintended outcome from the Bill and whether there may be an attraction for local authorities to grant permission for change in use to residential. They are not getting the income from the business rates, because of the relief, but they will suddenly get council tax if it converts to a residential unit, therefore increasing their income. Has that crossed your mind and is there anything we can do to try to prevent that happening?
Professor Tony Travers: Before James says anything about his sector, the whole purpose of introducing this system, which, as I said, I broadly sympathise with, is to create more incentives for authorities to think about their economy and to build it up. But it is absolutely the case that, if you face a choice, particularly now there is permitted development—you can change from non-domestic to domestic more easily than in the past—if the small non-domestic property does not pay a tax and the small domestic property would, inevitably, that creates—I am not saying all authorities would take it on every occasion, but it is within the realms of the incentive that you describe.
James Lowman: Alongside that there is a significant incentive to the operator or the property owner. In most cases, that property would be worth more as residential than it would be as a business, although there would be exceptions to that. There has to be a strong and effective planning system and local plans, so that we do not have case by case, site by site conversion from retail to residential. That may have to happen—some high streets may have to get a bit smaller—but it has to be done on a planned basis. It cannot be simply site by site—the lease comes up and it is converted to residential. That way you get very long, incoherent, pockmarked high streets without a clear centre to them. I think it is really important that the planning system mitigates that. As well as the commercial incentive for that to happen sometimes, there may now be—I will leave it to councils to say to what extent that will actually act as an incentive, but I entirely take the point you are making.