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Chamber and committees

Local Government and Transport Committee, 06 Mar 2007

Meeting date: Tuesday, March 6, 2007


Contents


Subordinate Legislation


Gambling Act 2005 (Mandatory and Default Conditions) (Scotland) Regulations 2007 (Draft)

The Convener:

Agenda item 3 is an item of subordinate legislation that is to be considered under the affirmative procedure. It is the first of the instruments that we have before us today. We have several instruments to consider under the affirmative procedure, followed by several to consider under the negative procedure. I ask colleagues to be as focused as possible, so that we make good progress through the instruments.

To discuss the draft regulations, we have Tom McCabe, the Minister for Finance and Public Service Reform, who is supported by Rab Fleming and Ken McKenna.

First, I ask the minister to give us some introductory remarks on the draft regulations, following which we will have an opportunity for questions and answers. After that, we will move to a formal debate on the motion in the minister's name.

The Minister for Finance and Public Service Reform (Mr Tom McCabe):

Thank you, convener, and good afternoon, everyone. This is a good opportunity to say a few words about this affirmative Scottish statutory instrument, which implements some aspects of the Gambling Act 2005. The committee will recall that, back in January 2005, the Parliament agreed that the Scottish ministers could be given certain powers under the 2005 act. Those powers include the setting of conditions affecting gambling operators in Scotland, and the draft regulations effectively put those into effect.

The 2005 act gives the Scottish ministers powers to make regulations providing for conditions to be attached to premises licences, under sections 167 and 168. Essentially, two kinds of condition may be attached.

The conditions attached to premises licences under section 168 will attach to all specified types of premises licence, unless they are excluded by the licensing authority that is responsible for issuing the premises licence. In Scotland, the licensing authority is the local licensing board, not the Scottish ministers.

The conditions attached to premises licences under section 167 will attach to all specified types of premises licence, and can be amended or excluded only by further regulations made by the Scottish ministers.

It is worth restating some of the licensing objectives that were contained in the 2005 act. First, the act aimed to prevent gambling from being a source of crime or disorder, from being associated with crime or disorder and from being used to support crime. Secondly, it aimed to ensure that gambling is conducted in a fair and open way. Thirdly, it was designed to protect children and other vulnerable persons from being harmed or exploited by gambling.

The Scottish ministers and ministers at the Department for Culture, Media and Sport have stated publicly that increased social responsibility lies at the heart of the new regulatory regime and that protection of the public, especially vulnerable people, is the main priority in implementing the 2005 act's provisions. Within the overall policy framework, the policy objective for the draft regulations is that mandatory conditions will apply basic minimum requirements to all premises licence holders. The draft regulations mostly comprise such conditions.

Default conditions apply where a general industry-wide or sector-wide approach is desirable to assist with national consistency. However, it is important to stress that local licensing authorities have the power to respond to local circumstances, and they can alter the conditions if necessary. The default conditions that are contained in the draft regulations relate solely to the opening hours of premises.

The draft regulations were consulted on widely. We have tried to strike a balance between the interests of the general public and those of gambling operators.

That is a broad overview, but I hope that it is sufficient. If there are any questions, I will do my best to answer them.

Paul Martin (Glasgow Springburn) (Lab):

The draft regulations cover default conditions, to which you referred. How has the position on the effective operation of opening hours been arrived at? No premises will be open between 10 pm and 7 am, but according to some of the anecdotal evidence that I have received, there can be incidents of antisocial behaviour surrounding betting premises. Could we consider a possible reduction in opening hours to deal with some of that behaviour?

Mr McCabe:

That is a good question and is exactly the sort of issue that might concern people in relation to a variety of types of licence. At the moment, there are winter and summer opening times. As I understand it, the summer opening times—I am not exactly sure in which months they run—already permit opening until 10 o'clock, whereas the winter opening times are shorter.

At present, licensing boards have no discretion to alter summer opening times. Under the draft regulations, they would have the facility to reduce opening hours to before 10 o'clock, if they thought that local circumstances dictated that. I appreciate that such a change is strongly dependent on local licensing boards taking cognisance or being made aware of conditions that are having a detrimental impact on people. This is a matter for the committee to consider, but the rationale behind the measure is to give local licensing boards more power. Depending on the locality and the proximity of residential properties, there may be isolated instances in which concern arises about when premises are open. I have indicated that we have tried to strike a balance, without taking a sledgehammer approach to the issue. Members are entitled to form a view on whether we have struck the right balance, but boards will now have the power and authority to take cognisance of local circumstances.

Are you saying that, until the draft regulations are approved, boards will not have the option of reducing opening hours?

As I understand it, at the moment they do not have the discretion to reduce the longer summer opening hours.

Paul Martin:

I have a technical question. My principles tell me that it would be better to send out a message to premises that the default position should be for them to close at 6 o'clock and to apply for an extension, if they want one. If I were successfully to oppose the draft regulations today, what would the position be? Would that cause difficulties for premises that conduct legitimate business and can extend their opening hours to 10 o'clock without that being associated with antisocial behaviour?

Mr McCabe:

It would cause both an administrative difficulty as the year moves on and a wider difficulty. Applications start to roll in around June, but we have no facility to lay another instrument after today, because only a few weeks of the session remain. The ability of whoever is responsible after the election for laying such an instrument to do so within the necessary timescales will be further constrained by the fact that it will take a number of weeks after the election for the Parliament to settle and to get its first meeting under way. We will then come up against the summer recess. As members know, time during the summer recess does not count for the laying of subordinate legislation. Effectively, it would be September before a new instrument could be laid, which might lead to considerable administrative confusion.

Nothing that I have said undermines the basic point that Paul Martin has made—that there can be instances in which there is concern about opening hours. If it is of any help to members, I would be happy to write to local licensing boards specifically to ensure that they are aware that they now have the facility to reduce summer opening hours to take account of local concerns. One of the officials may be able to provide members with more detail on the administrative difficulties that failure to approve the draft regulations would cause.

Ken McKenna (Scottish Executive Finance and Central Services Department):

It would cause difficulty with the overall implementation of the Gambling Act 2005, because on 1 September the act will repeal all the existing legislation from the 1960s. If no mandatory and default conditions are in force before then, the industry will be less regulated than it is at present and we will not get the new protections that have been built in to cover various provisions of the 2005 act.

Fergus Ewing:

I begin by stating that Carlton Bingo plc has its headquarters in my constituency, so I have obviously been in touch with the company over the years. Initially, it was highly concerned about the impact that the liberalisation of gambling law would have on the bingo sector. Has the Executive considered what effect liberalising the law on casinos will have on bingo in general? Have any specific concerns about that been expressed during the consultation exercise?

Mr McCabe:

The consultations on the liberalisation of gambling have been wide. We are not here to discuss specifically how many casinos there should be or where they should be; we are here for another purpose. Suffice it to say that there has been significant consultation and that, in the draft regulations under discussion, we think that we have struck the right balance between the interests of the general public—and the need to protect potentially vulnerable people—and those of the operators of gambling premises.

Has the Executive carried out any impact assessment of how bingo in Scotland will be affected by the changes in the law on casinos?

Ken McKenna:

It is worth mentioning that of the 17 new casinos permitted under the Gambling Act 2005, which fall into three categories—one regional casino or supercasino, eight large casinos and eight small casinos—only the large and the regional casinos are allowed to offer bingo as well as traditional casino facilities. The committee will probably be aware that, as a result of the casino advisory panel's recommendations to the Secretary of State for Culture, Media and Sport down south, there is likely to be only one new casino in Scotland, which will be in Dumfries and Galloway. As it will be a small casino, it will not be able to offer bingo facilities.

Fergus Ewing:

I am pleased to hear that that is the case, although that was also my understanding of the rules on casinos that offer bingo.

Does the minister accept as a general proposition that bingo is primarily a social activity in which the gambling element is soft, in that the amounts of money involved in a traditional evening's—or, indeed, afternoon's—bingo are not great and that it is not a form of the hard gambling that one would associate with a casino? Does he agree that bingo performs an important social role, particularly for retired people, and that we should therefore foster, encourage and support it?

Mr McCabe:

I would stop short of saying that we should foster, encourage and support it. I must admit that my knowledge of how bingo impacts on people is rather limited and that my knowledge of exactly what people do while they engage in bingo is even more limited, so I am at a bit of a disadvantage.

Fergus Ewing:

On one occasion, I called the numbers rather disastrously, so I am perhaps at a slight advantage. My understanding is that, typically, the people who enjoy a game of bingo are retired, tend to be female, may have been—and probably still are—smokers and regard bingo as a social activity that allows them to meet friends in a safe, warm place and have something to eat or drink. Given that the amount of money that is spent is relatively modest, the bingo industry has presented itself as a leisure industry rather than as an industry the purpose of which is to facilitate the hard gambling that we associate with casinos. Will the Executive take that into account when it makes any future policy decisions about the creation of more casinos in Scotland, which is something that I am not too enthusiastic about?

Mr McCabe:

Mr Ewing has obviously studied the matter in some depth. I am afraid to say that I am at a bit of a disadvantage. We will certainly bear in mind the comments that he has made if and when the Executive considers the social impact of bingo on the wider community.

As there are no more questions, I invite the minister to move motion S2M-5587.

Motion moved,

That the Local Government and Transport Committee recommends that the draft Gambling Act 2005 (Mandatory and Default Conditions) (Scotland) Regulations 2007 be approved.—[Mr Tom McCabe.]

Do any members wish to speak in the debate on the motion?

Paul Martin:

As I have already pointed out, my instincts tell me that we should reduce the opening hours of betting premises—otherwise known as licensed bookmakers—due to the incidents of antisocial behaviour that surround such premises in my constituency during the summer months. However, I recognise that other facilities within my constituency run reputable businesses and that those should be able to continue, so I will not oppose the motion.

I accept the minister's assurance that he will write to licensing boards to remind them that, where antisocial activities surround licensed premises and cause difficulties, boards should be aware of the opportunity to reduce their operating hours. Although I will not oppose the motion, I want to put on record my concerns about the issue.

No other members want to contribute to the opening debate. Does the minister want to respond to Mr Martin's comments?

Mr McCabe:

To echo what I said a few minutes ago, Paul Martin's point is well made. I am personally interested in ensuring that local licensing boards are aware of their powers to reduce default hours so that particular, localised difficulties can be dealt with. I know that such difficulties affect communities in different parts of Scotland, at least to some extent. As I said earlier, I am more than happy to write to local licensing boards to point out the concern that has been expressed at a parliamentary committee and to remind them that I want them to pay attention to the new powers that they possess.

Motion agreed to.

That the Local Government and Transport Committee recommends that the draft Gambling Act 2005 (Mandatory and Default Conditions) (Scotland) Regulations 2007 be approved.

The fact that the motion has been agreed to will be reported to Parliament. We will pause to allow the minister's two officials for this item to leave before we move on to the next item.


Representation of the People (Postal Voting for Local Government Elections) (Scotland) Regulations 2007 (Draft)<br />Representation of the People (Post-Local Government Elections Supply and Inspection of Documents) (Scotland) Regulations 2007 (Draft)

The Convener:

I propose that agenda items 3 and 4 be considered together. We can hear the minister's opening remarks and have a question-and-answer session on both sets of regulations, albeit that a separate debate and a separate vote may be required for each motion. Is the minister content with that?

Yes.

The Convener:

The first set of regulations is the draft Representation of the People (Postal Voting for Local Government Elections) (Scotland) Regulations 2007, for which the associated motion is S2M-5590. The second set of regulations is the draft Representation of the People (Post-Local Government Elections Supply and Inspection of Documents) (Scotland) Regulations 2007, for which the associated motion is S2M-5589. The minister is supported by Scottish Executive officials Russell Bain, Heather Aitken and Mark Richards. I invite the minister to make any introductory remarks that he may have on both sets of regulations before we move into the question-and-answer session.

Mr McCabe:

This is a welcome opportunity to discuss the further legislation on Scottish local government elections that George Lyon referred to when he gave evidence to the committee in January. The draft regulations have now been laid before the Parliament.

The two sets of regulations that we are considering set out the procedures for dealing with specific matters such as the issue and receipt of postal ballot papers and the supply and inspection of documents post election. A third set of regulations, which deal with the procedures for applications for absent voting—that is, voting by post or by proxy—have been laid before Parliament but are subject to the negative resolution procedure and are therefore not included in today's discussion.

The new revised procedures reflect changes in various pieces of legislation, including the Representation of the People (Scotland) (Amendment) Regulations 2006, the Electoral Administration Act 2006 and the Local Electoral Administration and Registration Services (Scotland) Act 2006.

The Representation of the People (Postal Voting for Local Government Elections) (Scotland) Regulations 2007 will replace the current postal voting regulations, which were first made in 2002.

The main changes will allow applications to be made for replacement ballot papers if the postal voting statement has been spoilt or if the voter claims to have lost or not received the ballot paper, the postal voting statement or the envelopes that were supplied for their return. Previously, the ballot paper could be replaced only if the ballot paper itself had been defaced, lost or spoilt. In both circumstances, applications can be made until 5 pm on polling day. Applications can be made after the 5 pm deadline, but they have to be made in person.

Voters will be able to ask for confirmation that their postal ballot papers have been received at the elections office. The regulations will also allow returning officers to collect postal ballot papers from polling stations when they have been returned there.

The committee will be aware that the draft Representation of the People (Post-Local Government Elections Supply and Inspection of Documents) (Scotland) Regulations 2007 have been revised following comments by the Subordinate Legislation Committee. The regulations set out the procedures for the supply or disclosure of information in the marked register, the marked postal voters list, the marked list of proxy voters and the marked list of proxy postal voters that are used at an election.

Both sets of regulations deal with the detail of administrative and procedural issues that are involved in running an election, and replicate what happens at other United Kingdom elections. Some of the changes have already been introduced for other UK elections; others will come into effect before the various elections on 3 May in Scotland and England.

That deals with the main parts of the regulations. I will do my best to answer members' questions.

Ms Watt:

If I remember correctly, when we have asked for marked registers after elections, we have found that the local government register remains with the council and the parliamentary election register remains with the sheriff court, and the cost of getting them has differed substantially. What will the fees be for supplying marked registers and lists?

That information is set out in the regulations. I think that there will be a standard fee plus £1.50 per thousand entries.

Russell Bain (Scottish Executive Finance and Central Services Department):

I can give the details. The costs reflect the fees that are already in place for a sale of the full register. The fee for information in data form is £20 plus £1.50 per 1,000 entries and the fee for information in printed form is £10 plus £5 per 1,000 entries.

Fergus Ewing:

There have been one or two serious cases of electoral fraud in England, although, as far as I am aware, there have been none in Scotland. Postal voting is seen to be a method of voting in which electoral fraud is most commonly found. The committee debated that matter when it considered the Local Electoral Administration and Registration Services (Scotland) Bill. Are the minister and his colleagues satisfied that the procedures that have been set out are as robust as they can be and that they will protect the public against postal vote fraud?

Mr McCabe:

Perhaps saying that the procedures are as robust as they can be is risky. We have strengthened the provisions, and various aspects of the legislation have strengthened the penalties for anyone who attempts to distort the process. We will be as vigilant as we possibly can be to ensure that there is no untoward activity.

Fergus Ewing is right to say that there have been serious and well-publicised cases of electoral fraud south of the border, although that has not been so much the case in Scotland. We think that the action that has been taken and the fact that the penalties have been strengthened will be a sufficient deterrent, but nobody is complacent. We must keep an eye on the matter in the forthcoming elections and in the future.

Russell Bain:

The Electoral Commission will meet the Association of Chief Police Officers in Scotland next week to discuss the various electoral fraud issues of which the police need to be aware, to ensure that the police service is fully briefed on the new offences, provisions and security measures. The Electoral Commission and the police are working to ensure that we are not complacent and that we do all that we can.

Mike Rumbles:

Regulation 18, "Notice of opening of postal ballot paper envelopes," says:

"The returning officer shall give to each candidate not less than 48 hours' notice in writing of each occasion on which a postal voters' box and the envelopes … are to be opened."

Regulation 7 contains many provisions on candidates' agents. It says:

"Each candidate may appoint one or more agents to attend the proceedings".

I understand that returning officers differ in how they open postal ballots. Some open them face upwards. In my local authority area, ballots are opened face downwards, so no agents can check what is going on. Is there a case for instructing returning officers that the same methodology should be used throughout the country?

Mr McCabe:

The more we standardise procedures, the less scope there is for people to worry about the impact of any deviation. We issue guidance to returning officers, but I do not know whether it covers that matter. Perhaps Russell Bain can clear that up.

Russell Bain:

The Electoral Commission has produced guidance for candidates and agents and for returning officers, which covers postal vote opening. I know from our discussions with returning officers that they are keen to provide as consistent a process as they can, which includes postal vote opening.

Will postal votes be opened so that agents and candidates can see them?

Russell Bain:

Regulation 22(5) provides that when covering envelopes are opened, returning officers

"shall keep the ballot papers face downwards".

That follows an Electoral Commission consultation on the issue. The provision is not designed to ensure that people are not aware of the situation, as the returning officer makes clear what is happening. The ballot papers are opened in that way to preserve the vote's secrecy.

So all ballot papers will be opened face downwards as standard?

Russell Bain:

Yes.

So there will be no point in having counting agents or anybody else for verification. Okay—that is fine. At least the practice will be consistent.

Members have no more questions.

Motions moved,

That the Local Government and Transport Committee recommends that the draft Representation of the People (Postal Voting for Local Government Elections) (Scotland) Regulations 2007 be approved.

That the Local Government and Transport Committee recommends that the draft Representation of the People (Post-Local Government Elections Supply and Inspection of Documents) (Scotland) Regulations 2007 be approved.—[Mr Tom McCabe.]

Motions agreed to.

We will report our decisions to Parliament in due course.

Before we proceed with item 6, there will be a change to the minister's team.


Local Governance (Scotland) Act 2004 (Allowances and Expenses) Regulations 2007 (Draft)

The Convener:

I welcome to the committee Liz Hamilton, deputy team leader, and Colin Gilchrist, who are from the principal legal office. I ask the minister to speak to the draft Local Governance (Scotland) Act 2004 (Allowances and Expenses) Regulations 2007, after which we will have questions.

Mr McCabe:

The Local Governance (Scotland) Act 2004 paved the way for regulations to implement a new remuneration structure for councillors throughout Scotland, covering salaries, allowances, reimbursement of expenditures and so on. The new scheme is based on the research and advice behind the recommendations of the Scottish local authorities remuneration committee, which reported in January 2006. It took account of the views of various stakeholders, which were sought during a consultation.

The rationale behind the new system is to value the service that people who stand for public office in Scotland offer. It is an attempt to make public office more attractive to a broader range of individuals. The remuneration committee found that, for the most part, councillors found their role compatible with holding other responsibilities. The new system also moves away from the principle of paying flat-rate allowances to councillors, regardless of their expenditure. To achieve all that, it is necessary to amend primary legislation.

The regulations amend sections 47 to 49 of the Local Government (Scotland) Act 1973, which deal with the payment of allowances to councillors to attend meetings, travel and other expenses, the removal from a local authority of the power to pay attendance allowance, and the requirement for travel, subsistence and other expenditure to be reimbursed on a receipted actual expenditure basis. Section 4(8) of the Local Government etc (Scotland) Act 1994, which allows authorities to pay their convener and vice-convener an allowance, is also repealed. In its place, authorities will have scope to reimburse their civic head with a specified maximum annual amount for actual receipted expenditure incurred by them to enable them to carry out their civic duties. That is in addition to any travel and subsistence costs to which they might be entitled.

The Convener:

I would like to ask a question on behalf of an MSP who is unable to attend the meeting. It relates to councillors who represent local authority wards that cover several islands. Will they still be able to claim allowances towards, for example, meal expenses if they are carrying out duties on an island that is not the one on which they live?

We have received representations on that point and have taken account of it in the regulations.

There are no further questions, so I invite the minister to move motion S2M-5647.

Motion moved,

That the Local Government and Transport Committee recommends that the draft Local Governance (Scotland) Act 2004 (Allowances and Expenses) Regulations 2007 be approved.—[Mr Tom McCabe.]

Motion agreed to.


Business Improvement Districts (Ballot Arrangements) (Scotland) Regulations 2007 (Draft)

For the last of today's affirmative instruments, we are joined by Nikola Plunkett. I ask the minister to introduce the draft regulations. We will then take questions.

Mr McCabe:

The draft Business Improvement Districts (Ballot Arrangements) (Scotland) Regulations 2007 will enable business improvement districts to involve tenants and owners, and domestic rate payers, in voting on BID proposals. The regulations put in place the option for BID proposers in Scotland to seek the participation of tenants and owners in their BID area. The approach was recommended to the Executive by the BIDs working group and has been broadly welcomed by the public sector and the private sector.

We recognise that the involvement of owners and tenants is not straightforward because of issues such as registration and the tenure of properties. On the whole, though, we are content that the regulations provide a workable solution that meets the wishes of the business community in Scotland. There is a two-part voting system. The regulations concern themselves only with the second part. The system is designed to protect the interests of large and small businesses. The number voting and the rateable value of the properties involved have to be in the majority for the BID proposal to be approved. That approach prevents one group from forcing unwelcome proposals on another.

When only ratepayers are involved in a ballot, there is a simplified voting procedure along the lines of the one that was adopted in England and Wales. However, Scottish stakeholders considered that not just ratepayers benefit from successful BIDs. Owners and tenants also gain through increased property prices and higher rateable values, so it seems fair that, where appropriate, they should participate and have the associated voting rights and liability for a levy. Some of the Scottish BID pilots are investigating the best ways to involve tenants and owners in their proposals. The regulations give them the scope to do that.

The regulations complement two other pieces of legislation on BIDs. First, draft regulations on BIDs are being finalised and will be laid before Parliament later this week. Secondly, a draft section 104 order under the Scotland Act 1998 on the reserved aspects of BID policy will be laid before the United Kingdom Parliament later this week. That is led by the Scotland Office with support from the Department for Communities and Local Government.

The regulations are part of the partnership agreement to establish business improvement districts in Scotland. We provided funding for six BID pilots to kick-start the process and, with the committee's agreement, we hope to put in place the final pieces of the legislative jigsaw after today's meeting. The challenge will then pass to the Scottish business community to use its expertise to introduce BID projects to boost business areas and add value. There is every indication that they will receive the full backing of local authorities and other stakeholders, such as Scottish Enterprise.

I will do my best to answer any questions.

Fergus Ewing:

I wish to raise an issue of which I gave the minister's office notice last week and which I raised during the stage 3 debate on the Planning etc (Scotland) Bill. It arises from what appears to be a serious flaw in the bill. I made the same argument in the stage 3 debate, so it will come as no surprise to the minister.

The BID scheme is, broadly, one in which the Government puts in half the money for a particular project and the business community in a city centre puts in the other half. The Times Square model is often mentioned. There is a contribution from the public and a contribution from the private sector. That is the idea in outline, although there are variants of it.

The flaw that was identified at stage 3 is that a business that rents property—whose tenure is as tenant—will have to pay its contribution, or its BID tax, as a tenant. However, as the minister knows, almost all tenants in Scotland have full repairing and insuring leases. That is certainly true of the vast majority of tenants of more valuable premises. Under such leases, there is routinely a clause that provides that the landlord shall pass on to his tenant liability for all rates, taxes and levies that are imposed by central or local government. I know that because I used to advise clients on commercial leasing.

The clause that one tends to find is, broadly speaking, a standard clause. The idea is to pass on all potential liability for public taxes, whether local or national, from the landlord to the tenant. The landlord's motto is, "Let it and forget it." The tenant is lumbered with the local authority rates and taxes.

The flaw of the Executive scheme, therefore, is that a tenant in a shop on Church Street in Inverness, for instance, will have to pay his BID tax as a tenant, as well as the landlord's BID tax. In other words, under the planning legislation that was passed by the Scottish Executive but opposed by us, some tenants might have to pay two taxes. That seems unfair in principle.

Can we have a question?

Fergus Ewing:

I just wanted to set out the general argument, so that it is clear for people who happen to be listening, as this is of great interest to the business community. Mr Chisholm, when he answered my point about this issue at stage 3 of the Planning etc (Scotland) Bill, admitted that this situation might arise. Since that time, have you sought to address and remove that flaw, minister? If not, do you accept that it is a fatal flaw for the legislation?

Mr McCabe:

No, I do not accept that it is a fatal flaw, and I do not accept at all that someone will have to pay two taxes. That is perhaps a misunderstanding of how the system will work. Mr Gilchrist can offer some clarification, and I will come back to the question later if necessary.

Colin Gilchrist (Scottish Executive Legal and Parliamentary Services):

In considering a particular property on the roll, we are not talking about two levies. There is one levy, which is allocated to the property. The amount of the levy is allocated between the owner and the ratepayer. Mr Ewing claimed that it is routinely the case that commercial leases in Scotland pass the landlord's outlays in that respect down to the tenant. That is a matter of commercial negotiation between the landlord and the tenant. Let us take the example of a short-term lease of six months or one year. Such a lease would not necessarily be on a full repairing and insuring basis. There might be a provision that the tenant pays the gas and electricity costs and the rates, but no reference to costs relating to the landlord's interests. I do not necessarily accept the argument that has been put.

Does the minister wish to add anything?

Mr McCabe:

I just restate that there is only one levy on a property. The idea that someone would pay two taxes is flawed. The levy on the property would be the same irrespective of how it might be divided. There may be an agreement between parties on the liability for whatever charges a property attracts.

Suppose that there is one levy in respect of one property—say a retail unit on Church Street in Inverness. That property is leased, so there is an owner—the landlord—and a tenant. How would the one levy be divided between the two parties?

Nikola Plunkett (Scottish Executive Finance and Central Services Department):

The BID proposal—which is voted on—establishes how the apportionment between the non-domestic rate payer and the owner is made.

Well, how would it be made? You tell me.

Nikola Plunkett:

Let us suppose that the levy for a property is £100 and that the BID proposal says that 10 per cent will be paid by the owner and 90 per cent will be paid by the non-domestic rate payer. The owner will pay £10 for that year and the non-domestic rate payer will pay £90.

I think that you would agree that, if the lease provided that the tenant paid the owner's taxes, as I have postulated, the tenant would pay the £90 plus the £10.

Nikola Plunkett:

Our position is that we do not think that that sum would automatically be passed on. When we looked at what has been happening in England, where they did not legislate for the involvement of property owners, we found that property owners have been getting involved voluntarily and have often made quite large financial contributions.

Fergus Ewing:

Yes, but it is a matter of simple law that if the tenant leases a property in a place where the BID levy is £100 and he has to pay £90, and his lease says that the owner is entitled to require him to pay all national and local taxation, the landlord is entitled to ask the tenant to pay the £10 as well. The landlord might choose not to do so if he is a philanthropist, but I confess that I have limited experience of landlords operating as philanthropists. The fact of the matter is that in a large number of cases, the tenant will have to pay the whole BID levy.

Nikola Plunkett:

Depending on the contract, it might be true that the cost will be passed on in some cases, but our understanding is that it will not be in most cases, even if the contract provides for it.

On what is your understanding based? How are you able to conclude today that in most cases the whole BID levy will not be passed on?

Nikola Plunkett:

It is based on what we have heard from all our stakeholders, almost all of whom support the proposed way of providing for the involvement of property owners. It is also based on our understanding of how the situation is playing out in England at the moment.

Fergus Ewing:

My specific question is, how do you conclude that in most cases the tenant will not have to pay the whole BID levy? How can you provide any evidence that gives you confidence that in most cases in which landlords are legally entitled to pass on a responsibility under a lease with a routine clause—I assure the minister that such a clause is commonly employed in respect of properties, particularly those of great value—the tenant will not have to pay the whole BID levy?

Mr McCabe:

There are different drivers at work here. We are introducing a new concept and a new opportunity in Scotland for people to contribute to improving their environment and business trading conditions. Clearly, if tenants felt that they would be responsible for 100 per cent of the levy, that might influence how they would vote on the BID proposal. That could be a driver that says to tenants, "Well, if I'm going to be responsible for 100 per cent of the levy, I don't favour that BID proposal." That is another driver that certainly has not been part of the dynamic between tenants and owners so far.

I think that I have put all my questions, convener.

As there are no more questions, I invite the minister to move the motion before we proceed to the debate.

Motion moved,

That the Local Government and Transport Committee recommends that the draft Business Improvement Districts (Ballot Arrangements) (Scotland) Regulations 2007 be approved.—[Mr Tom McCabe.]

Fergus Ewing:

I move against the motion, because of the arguments that I have just set out. It is clearly the case that there is a serious flaw in the legislation, which was identified during consideration of the primary legislation under which the regulations are made. I raised that flaw at stage 3 with the then Minister for Communities, Mr Chisholm. To be fair to him, he acknowledged that it was a serious problem that those businesspeople who rent property will find in many cases—I believe in most cases—that they will have to pay the landlord's share of the BID levy as well as their own.

My evidence for that is simply two decades of practice in the legal profession, when I dealt routinely with commercial property. I see one of the civil servants shaking his head, as he is entitled to do, but it is routinely the case that commercial leases pass on liability from the landlord to the tenant. Landlords are not in the business of being philanthropists and they are entitled to enforce contracts. I know that the Scottish Executive supports and often has supported such an argument. Those who are entitled under the law to pass on liability will do so—that is the point of having contracts and paying expensive fees to lawyers.

I will address briefly some of the arguments that were put in response to me. First, Mr Gilchrist said that some premises might be let under a short-term lease on a six-month or one-year basis, which is true. However, such properties are relatively few in number in city centres, they tend to be the smaller retail properties and, I believe, a clear majority of them tend to be occupied under the commercial leases that will pass liability for everything to the tenant.

Be that as it may, even if some tenants do not have to pay the whole bill, an awful lot of them—I believe it will be most of them and the officials believe that it will not—will have to pay the whole bill. Surely that is unfair.

The second argument, put by Nikola Plunkett, was that there is evidence that most owners will not seek to pass on liability to their tenant. When I asked her for the basis for that belief, she said that it was twofold: first, because she understood from stakeholders that that is the case; and secondly, because of the practice in England. I would like to know who the stakeholders are. I am not aware of anyone who has specifically said that landlords will not pass on legal responsibility to the tenants under their contract. I am not aware of any business organisation that would advise its members to give up legal rights that they have won in a contract that they have paid lawyers to draft and execute. I am therefore interested in knowing who the stakeholders are. I know that there are stakeholders who have expressed broad support for BIDs, but that is an entirely different matter.

Ms Plunkett's second assertion was that in England, landlords refrain from passing on responsibility for this tax to their tenants, presumably out of a sense of public-spiritedness. Again, I would like to see the actual evidence for that, if there is any.

Convener, I am not persuaded that the BIDs levy is anything more than a back-door tax on business at a time when we want business rates to be reduced, especially for small premises that are competing against internet-based businesses that do not have to pay business rates. However, the issue that I have identified today is a fatal flaw that the Executive could have addressed by preventing the passing on of such liabilities. That might have been difficult or impossible to achieve, but the fact remains that there is a fatal flaw in the draft regulations and that is why I will vote against them this afternoon.

The Convener:

At least Fergus Ewing is being consistent in his opposition to business improvement districts. However, just because he is consistent does not mean that he is right—his argument is fundamentally wrong. I say so because, first and foremost, business improvement districts are not about philanthropic gestures by businesses; they are about businesses entering into relationships with other businesses and local authorities to improve the business prospects of an area. If businesses vote for a business improvement district, they do so on the basis that they think that the proposals for the BID will be good for their businesses. That can apply equally to people who are renting a property for the purpose of doing business and people who own a property that they wish to let for the purpose of doing business.

Fergus Ewing seems to want to deny Scottish businesses access to a tool that is available to English businesses and that has been used successfully in several towns throughout England. It has been used successfully because businesses have voted for it. It is not, therefore, a tax on businesses—businesses have chosen to go into partnership with the public sector to improve town centres or business districts to enhance their own prospects.

Fergus Ewing's question about tenants is also a red herring. Either tenants will be aware that they have a contractual obligation to pay the business improvement district levy because of the contractual relationship with their landlord or they will be aware that they do not have such a contractual relationship. They will, therefore, be able to make that decision when they sign the contract in the first place, when they vote on the business improvement district or when their lease comes up for renewal.

If Fergus Ewing is concerned about the impact of costs and taxation on businesses and small businesses, the best that he could do is not concentrate on the costs of business improvement districts, which will be a relatively small percentage of any business's turnover, but tell his party leader to drop his policy of a local income tax that would hit local small businesses very hard indeed.

Do any other members wish to contribute?

I was with you all the way, convener, until then. As we all know, a local income tax would help a great many people, but that debate is for another day. Although I disagree with your final comments, I will support the motion.

Mr McCabe:

You are right, convener, to say that businesses do not propose BIDs for philanthropic reasons. A BID proposal is designed to improve the business trading conditions, and people want to improve the business trading conditions because they see the potential for more profit and a more viable business by creating an area that is more attractive not only to the businesses but to the population in general.

We seldom have much choice over taxes, but the individuals who involve themselves in a BID proposal have a choice. A democratic vote takes place, and if people do not want to take part in the BID proposal they can cast their votes accordingly. I do not think that anyone is saying that we have created Shangri-La with this piece of legislation or that everything is perfect and tied down, but on the basis of evidence from other parts of the United Kingdom and around the world, this kind of initiative has proved to be successful and worthwhile in growing and improving businesses at a local level. It encourages greater symmetry between the activities of local business and local governance, which can only be a good thing.

Although I appreciate that Mr Ewing expresses genuine concerns, I believe that they are ill-founded. I therefore urge committee members to vote for the instrument.

The question is, that motion S2M-5585, in the name of Tom McCabe, be agreed to. Are we agreed?

Members:

No.

There will be a division.

For

Martin, Paul (Glasgow Springburn) (Lab)
McMahon, Michael (Hamilton North and Bellshill) (Lab)
Muldoon, Bristow (Livingston) (Lab)
Rumbles, Mike (West Aberdeenshire and Kincardine) (LD)

Against

Ewing, Fergus (Inverness East, Nairn and Lochaber) (SNP)
Watt, Ms Maureen (North East Scotland) (SNP)

Abstentions

Tosh, Murray (West of Scotland) (Con)

The result of the division is: For 4, Against 2, Abstentions 1.

Motion agreed to.

That the Local Government and Transport Committee recommends that the draft Business Improvement Districts (Ballot Arrangements) (Scotland) Regulations 2007 be approved.

The Convener:

That brings us to the end of this marathon session of affirmative instruments. I thank the minister for his attendance. I also thank Colin Gilchrist and Nikola Plunkett, and the other officials who assisted the minister with the previous instruments.

Thanks very much, convener. I think that that brings to an end my appearances before the committee in this parliamentary session. I thank you for the way in which I have been received every time that I have come along.

Thank you, minister, for the way in which you have always presented your case.


Local Government Pensions Etc (Councillors and VisitScotland) (Scotland) Amendment Regulations 2007<br />(SSI 2007/71)<br />Licensing (Clubs) (Scotland) Regulations 2007 (SSI 2007/76)


Personal Licence (Scotland) Regulations 2007 (SSI 2007/77)<br />Public Service Vehicles (Registration of Local Services) (Scotland) Amendment Regulations 2007 (SSI 2007/79)


Sale of Alcohol to Children and Young Persons (Scotland) Regulations 2007<br />(SSI 2007/93)<br />Licensing (Training) (Scotland) Regulations 2007 (SSI 2007/95)


Occasional Licence (Scotland) Regulations 2007 (SSI 2007/96)<br />Licensing (Designated Airports) (Scotland) Order 2007 (SSI 2007/97)


Licensing Qualification (Scotland) Regulations 2007 (SSI 2007/98)

The Convener:

Item 8 is a number of negative statutory instruments. No members have raised points on any of the instruments, the Subordinate Legislation Committee has not drawn any instruments to my attention and no motions to annul have been lodged. I intend to put a single question on the instruments, unless any member wants to single out an instrument for specific mention. Is that acceptable?

Members indicated agreement.

Can I confirm that we have nothing to report on the instruments?

Members indicated agreement.