Banking reforms welcomed but industry voices concerns over Business Rate Supplements Bill

The Queen’s speech has received a mixed reaction from the industry.

Trade bodies welcomed the banking reforms, but concerns were expressed over the Business Rate Supplements (BRS) Bill .

The Federation of Master Builders (FMB) branded the bill as “yet another kick in the teeth for a construction industry already suffering as a result of the credit crunch”.

Houses of Parliament
Credit: Maurice

Commenting on the speech, Brian Berry, director of external affairs at the FMB, said: “At a time when 60% of FMB housebuilders are reporting falling workloads, the last thing builders need is yet another tax. The government says it wants to help the construction industry, but again has done the exact opposite by introducing more regulation and another tax that will disproportionately hit SME builders.

“These new taxes will drain business resources, disproportionately impact on SMEs and increase the competitive advantage of the informal economy. All of this impacts on the overall competitiveness of the construction sector and may be the final blow for many companies.”

The CBI also voiced its concern over the bill.

“Additional funding is needed for big infrastructure projects, especially Crossrail,” the CBI's deputy director-general, John Cridland, said, “but now is not the time to bring in new powers to raise tax more widely from business.

“The CBI wants, at the very least, for firms to be able to vote on every proposed local business rates supplement, so firms aren’t saddled with a potential £1bn annual tax increase without a proper say in the process.”

The British Property Federation, however, said it welcomed the BRS Bill, though it warned that funding for business improvement districts (Bids) could suffer as a result.

A Bid is a public-private partnership whereby businesses in a specific area elect to pay an additional tax that will fund improvements to the district’s public realm and trading environment. Retailers in London’s West End, for example, use a Bid to enhance security and improve street cleaning.

We thereby urge the government to amend the existing legislation to allow Bids to raise finance from property owners on a mandatory basis

British Property Federation

James Anderson, policy officer at the BPF, said: “Times are tough for owners and occupiers and while the additional funding raised through the business rate supplement will benefit London’s infrastructure in the long term, we are concerned that funding for existing Bids may suffer as a result.

“We thereby urge the government to amend the existing legislation to allow Bids to raise finance from property owners on a mandatory basis, where they consider it appropriate and possible to do so.

“This will be fairer for those landlords that already make voluntary contributions and occupiers such as small businesses, who Bids might turn to for any funding shortfall as a result of the business rate supplement. Ultimately, such a move would allow Bid finances to be put on a more sustainable footing.”

There was no dispute in the construction industry over the Banking Reform Bill, however, which was received warmly by industry leaders.

Under the bill, large fines could be introduced for banks accused of not lending money responsibly, and the Bank of England, the Treasury and the Financial Services Authority (FSA) would be allowed to intervene sooner to prevent another banking crisis,

General secretary of Ucatt Alan Ritchie described it as a “an important measure”.

“By introducing these sanctions it should help restore confidence in the industry and encourage companies to start building again,” he said.

The National Housing Federation also welcomed the bill, but chief executive David Orr warned it should focus on preventing lenders from “unreasonably changing the terms and conditions of loans given to housing associations”.

He added: “At a time when the building of new affordable homes is slowing down by record rates we need to remove any unreasonable obstacle to housebuilding.

“We are facing a housing national crisis – and housing associations, who build this country’s social housing, need all the help they can get to carry on building through the credit crunch.”

Other measures announced included the government’s Education and Skills Bill, which was welcomed by Ucatt.

At a time when the building of new affordable homes is slowing down by record rates we need to remove any unreasonable obstacle to house building

National Housing Federation

The bill aims to ensure that by 2013 every “suitably qualified” young person will be given an entitlement to an apprenticeship.

“This measure is long overdue,” said Ritchie. “Many construction companies treat training and apprenticeships with contempt. We are now experiencing the twin problems of an aging workforce and a skills gap. It is only through statutory measures that employers will be forced to train the skilled construction workers of tomorrow.”

The Community Empowerment Bill was also introduced, which includes measures to restructure regional planning in England, along with the Marine and Coastal Access Bill which will lead to the establishment of the world’s first systematic spatial planning system for UK waters.

The policy director of the Royal Town Planning Institute (RTPI) said the Community Empowerment Bill would bring “much needed certainty to the forward shaped of England’s regional planning system”.

However, he added that the RTPI would be calling on the government to “recognise the urgent need to set out the shape of the new system, and build public and professional confidence in it”.

On the Marine and Coastal Access Bill, Jed Griffiths, chair of the RTPI marine spatial planning task group, described the proposal as “ground breaking”.

“It demonstrates the government’s commitment to use spatial planning to deliver better social, economic and environmental outcomes from increasingly complex and conflicting marine-based activities and development proposals,” he added.

A spokesperson for the RICS, however, added that the bill would need to ensure the support of landowners and land managers if it was to be effective.

“It must include compensation and an appeals procedure,” he added. “Coastal partnership between citizens and landowners is important but where a path poses a security threat or has a substantial impact on productive land use, there should be a fair and transparent appeal process."

On the Local Democracy, Economic Development and Construction Bill, the CBI's John Cridland commented: “The CBI supports the government’s attempts to streamline the regional tier of governance and create a single integrated regional strategy to drive economic development.

“However, we cannot become obsessed by structures and processes and must ensure that this reorganisation results in enhanced economic development, especially at this difficult time,” he added.