Community Right to Challenge (Business Improvement Districts) Regulations 2015

Lord Kennedy of Southwark Excerpts

Tuesday 24th February 2015 Grand Committee

[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.

[Lord Ahmad of Wimbledon]

My Lords, I thank both noble Lords for their questions. As I said in an earlier debate, when we look at our local markets and high streets, it is important that we focus on these areas in a localised way. It is important to put on record that a business improvement district is a defined area in which a levy is charged on all business rate payers in addition to the business rate bill. The levy is used to develop projects from which those businesses in the local area will benefit.

The noble Lord, Lord McKenzie, raised the PWC report. In my opening statement, I cited the improvements that we have seen in the high streets. We are giving local communities power to save shops through the community right to bid, and neighbourhood plans are also allowing local businesses to set out changes to local planning. I take on board the concerns that he raised about local high streets and the concerns about closures that have happened in certain areas. It is important that local authorities also take greater responsibility.

I remember from my own experience in a local authority when I was the cabinet member responsible that we ensured, for example, a simple solution on parking, which is now used extensively across London and other areas—20 minutes’ free parking to bolster the local shop network. That perhaps also alludes to a point that the noble Lord, Lord Kennedy, raised about transport and supporting transport infrastructure. We need to ease the burden on shops and local businesses by helping them to facilitate foot flow and shopper flow into them. In many areas, local authorities do a very good job in ensuring that they can ease parking restrictions, for example.

The noble Lord, Lord McKenzie, always asks very technical questions when I am in Committee or on the Floor of the House. I am minded of the fact that he researches these issues quite thoroughly. On the impact of state aid and the two questions that he asked, I seek his indulgence and will write to him specifically on those issues.

The noble Lord, Lord Kennedy, referred to the risk of fragmentation of services. I do not share that concern about BIDs because we are seeking to widen the scope of organisations that can deliver services more effectively. As I said in my opening remarks, when local authorities are looking to procure services, accountability remains with them. They are the democratically elected bodies that electors will hold to account. The idea is not to break up or fragment services but to widen their scope and to identify the bodies that can deliver services most effectively. Certainly there has been a demand to see how local businesses working in an area can take greater responsibility for local services.

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On the question of how many organisations have successfully used the right to challenge, the information gathering we have done to date indicates that there have been about 50 instances of community groups using the right to challenge. A survey we carried out in July 2014 of voluntary and community sector groups that had used our advice service found that 43 organisations out of the 105 respondents intended to put in an expression of interest in the months ahead. Of the expressions of interest that we are currently aware of, seven have triggered procurement exercises or have led to work being awarded through service-level agreements.

[Lord Kennedy of Southwark]

My Lords, it has struck me that we have not mentioned anything about the planning process. I am a councillor in Lewisham and the Brockley Road, which is in the area I represent, is a wonderful high street. It is vibrant and has many different types of shops there—there is a Co-op, a Budgens and other smaller shops—and the variety works. Lordship Lane, which is near to where I live, also has a great deal of variety.

However, there are other places which have problems and where there are not-so-good shops that are all very similar. This legislation may be part of the solution, but is there not an issue about the powers that authorities have in being able to use the planning process to ensure that they get a better variety of shops to serve their communities? You can find very good and very poor high streets close to each other, and the variety of shops, the kind of people who use them and the transport links can vary locally as well.

[Lord Ahmad of Wimbledon]

On some of the specific issues and more generally, the Government have sought to again look at the planning process to see how that may be improved. The concept of the changes we have seen—for example, in neighbourhood planning—allows local business areas and local people to set out what their planning priorities are. The move has been towards ensuring greater responsibility at a local level. However, we all share the noble Lord’s concerns. Local high streets are the lifeblood of what defines Britain today. The Love Your Local Market and Love Your High Street campaigns are not divided on political lines because we all support the incentive. Across the country, many local authorities of all political colours are currently looking towards their high streets and delivering and procuring good services from a variety of different providers. We need to recognise and applaud that—but, of course, there is always more work to do.