Ways and Means

I will come back to the views of that institution in due course. Clearly, at that time the combination of low rents and the fact that in the ’70s, ’80s and early ’90s recessions were a regular occurrence was a concern for businesses. As a result of the stability that we have put in place in recent years, that is now less of a concern. The level of rents in the UK is also a key driver for reform. A series of recent reports by the private sector—including by CB Richard Ellis in 2006 and DTZ research in 2004 and 2005—have identified UK rents as among the highest in the world. That west end office space in London is regularly ranked as the most expensive in the world reflects a variety of influences; land supply and planning restrictions are two important factors. However, as London is the world’s financial capital, it is perhaps less surprising that there are high rents in London than it is to find that office rents in cities such as Birmingham, Manchester, Leeds and Edinburgh are ranked as more expensive than in Manhattan, Madrid, Frankfurt and Sydney by these various reports. There are significant regional variations in headline rents. In the south-east, Guildford’s rents are £10 per sq ft but Brighton’s are £5.50 per sq ft. In the north-west, rents are £6.25 per sq ft in south Manchester but £6 per sq ft in Trafford park. In the north-east retail sector, rents peak at £330 per sq ft in Newcastle, and fall to £145 in Sunderland and £65 in Stockton. There is also significant variation within towns and cities. For example, in Newcastle rents vary from £330 in Eldon square—the central shopping mall—to just £70 on Lower Grainger street, which is within half a mile of Eldon square. Office rents in London range from more than £60 per sq ft in prime west end and the City to £48 in prime mid-town and £50 in prime Canary Wharf. In contrast, rents are £21 in Brentwood and £13 in Harlow. Rental prices have a real impact on business, and finding ways in which we can address the efficiency of the commercial property market is a key objective of the reforms. I am sure that Members in all parts of the House recognise that land should not sit idle while labour and capital pay. Kate Barker said that reforming empty property rates"““would have a number of beneficial effects””." She went on:"““when there is the prospect of continued vacancy, landlords are more likely to reduce rents in order to encourage occupation. This is beneficial for both new and existing business tenants””." She added:"““landowners have less of an incentive to hold back land in the expectation that property values will continue to rise or to secure a change of use. This will increase the supply of land for development””." She also said that"““development is encouraged on sites which have already been developed, which reduces the need to build on greenfield sites and improves environmental outcomes.””" The Government accepted Kate Barker’s report and asked Sir Michael Lyons to consider the implications arising from these recommendations as part of his proposals for reforming local government finance. Sir Michael received representations from local planners and local government bodies, from regional economic development offices and from the Federation of Small Businesses. All were in favour of reform and recognised that the measures set out in this Bill will increase the supply of land and commercial property available for occupation and redevelopment. From such local authorities as Hull city council and Hampshire county council came requests for changing the rating of empty property to increase the supply of land and to reduce speculation. Birmingham city council suggested bringing industrial premises back into the scope of rating empty property, and bodies with wider development objectives also responded. For example, Merseytravel recommended that the unlimited period of rate relief in the current system be done away with. The Federation of Small Businesses had already identified this as an important area for reform in its 2005 report. It realised, as did the Barker report, that increasing the opportunity cost of holding property empty will increase downward pressure on rents. As companies that predominantly rent their premises, the availability of property at lower rents is critically important to small companies across the country.