Ways and Means

I said earlier that these issues apply to the whole country, in both high and low-demand areas. Particular protections are in place for charities, sports clubs and listed buildings, which will be considered as part of ongoing consultation on the legislation. However, what we can do is to target particular help on low-demand areas. We recognise that in some parts of the country there are low levels of demand and that, as a result, commercial property can sit empty for longer periods. By way of response, we have introduced with effect from 11 April—a full year in advance of the proposed changes to empty property rating, which will not come into effect until next April—a new 100 per cent. capital allowance for the renovation of business property in assisted areas across the UK. The business premises renovation allowance is available to owners in these areas of property that has stood empty for more than one year, and it will provide a huge boost to those who want to create attractive commercial property fit for the needs of new and existing businesses. Given that we also want to maintain high levels of development on brownfield land, especially that which it is costly to remediate, we are consulting now on the extension of land remediation relief to a wider range of contaminated sites. The consultation includes extending the scope of the existing 150 per cent. capital allowance to the clean-up of sites with long-term derelict property on them, as well as to those that have been invaded by Japanese knotweed—which I am sure at least some Members will recognise as a serious threat to many urban and rural locations. We intend also to increase the incentives for on-site remediation, thereby decreasing the pressure on landfill. To provide flexibility for leaseholders faced with onerous penalty payments to enable them to rid themselves of leases that they no longer need, or which do not provide them with the flexibility that they require, we intend to consult on changing the tax treatment of such payments to ensure that they are fully recognised by the tax system. For those companies actively using property and paying business rates, we have also accepted Sir Michael Lyons’ recommendation that the retail prices index cap on business rates be retained. This fits into our wider strategy of improving business competitiveness. We will also examine the case for local supplements on the rates, as set out by Sir Michael, but while paying the closest attention to ensuring that business has a strong and clear means of holding local authorities to account. Reforms to be outlined in the planning White Paper will help to provide an environment for the development of the quality and quantity of property that UK businesses and homeowners demand. Finally, let me put this in a slightly broader context. Investment in property is essential to business and to creating a modern, dynamic economy. At the centre of the reforms that we have put in place in recent years has been the launch of UK real estate investment trusts. Thirteen companies have already become UK REITs since the beginning of this year. In addition to the measures that we are debating today, REITs are another way in which we can improve the quantity and quality of finance available for property in a revenue-neutral fashion. We also announced in the Budget that we are taking the same principles that shape UK REITs and building tax equivalence for property authorised investment funds, thereby allowing open-ended investment in property through unit trusts to enjoy the same tax treatment as that enjoyed by UK REITs. These are supportive measures to boost the supply of property suitable for investment that meet the needs of British firms. Today’s motion is one part of that reform and modernisation, which spans the whole commercial property market and provides incentives for owners, developers and tenants to produce the right kind of property, and to take advantage of efficiencies in the use of land and property that will increase supply and drive down costs for their consumers. The Government are working hard to ensure that we provide the right conditions for businesses to grow, for land and property to continue to be developed, and, once developed, for it to be used efficiently. In its submission to the Callcutt review of house-building delivery, the Home Builders Federation signalled the supply of land as the major factor that will determine whether the Government’s target of 200,000 new homes built by 2016 will be met. As the Government increase the supply of housing to meet the needs of households across the UK, a tax relief for property sitting empty on developed sites makes neither economic nor environmental nor social sense. That is why this is a principled reform that is overdue and forms part of a positive set of announcements on the future taxation of land and property. The measure has had extensive work and consultation by my hon. Friends the Financial Secretary and the Minister for Local Government. It is hard to achieve a consensus with the Opposition on the importance of building new homes, given the continual opposition of shadow Front Benchers to house building in our country, but I hope that we will reach consensus at least on this measure.